Gannon v. Gannon, 2021 ONSC 7160

COURT FILE NO.: FC-20-1016

DATE: 20211027

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Kelli Lynn Swan Gannon

Applicant

– and –

Joseph Albert Gannon

Respondent

Kady McCourt, for the Applicant

Miranda Lall, for the Respondent

HEARD: October 15 & 18, 2021

RELEASED: October 27, 2021

Justice ALEX FINLAYSON

PART I: NATURE OF THIS MOTION

[1] The Applicant wife brings a motion for temporary child and spousal support commencing August 1, 2020, and for an advance of $250,000.00 on the equalization payment that will be owing to her. She asks that the advance be paid out of the husband’s share of the proceeds of sale of the matrimonial home. The sale is closing soon, in November, 2021.

[2] The parties agree about the wife’s entitlement to spousal support, and the commencement date of August 1, 2020 for both child and spousal support. They disagree about the quantum of child and spousal support that the husband ought to pay, because they disagree about the determination of the husband’s income, whether income should be imputed to the wife, whether all three of their children have been entitled to child support since August 2020, and the appropriate range of spousal support on the Spousal Support Advisory Guidelines (“SSAGs”). The husband also disputes that an advance towards the equalization payment should be paid to the wife at this time.

[3] The more complex aspect of this motion involves the determination of the husband’s income. The husband is a self-employed. Since the 1990s, he has owned and operated a franchise of a company called Snap-On Tools. Prior to that, he worked for Snap-On Tools in sales. He is the sole shareholder of the numbered company through which he operates his franchise.

[4] The wife relies on the income reports from Jason Kwiatkowski of Valuation Support Partners Ltd., the chartered business valuator whom she retained to determine the husband’s income and to calculate the value of his business. The wife argues that the husband’s 2020 adjusted income for child and spousal support was $189,000.00 and she seeks to base support on that income. The amounts of child and spousal support she claims change in certain months between August 2020 and now, as two of the children’s residential arrangements and one child’s status as a “child of the marriage” have changed over the past year.

[5] As of September 1, 2021, the wife says the husband should pay child support of $848.00 per month. That is child support for the parties’ two eldest children, Jordyn and Tyler, based on the income of $189,000.00, and using the “summer formula” in DivorceMate. Both Jordyn and Tyler will be living away from home for university during the 2021-2022 school year. The wife chose not to seek prospective child support for their youngest child Tanner at this time. By September, 2021, he turned 18, he had already finished high school and he is now taking a “gap year”. Child support for Tanner may be an issue at trial, as the wife says he intends to resume his education next fall.

[6] The amounts of spousal support that the wife claims also change between August 2020 and now, depending on the child support to be paid in the different months. Commencing September 1, 2021, the wife seeks spousal support of $6,335.00 per month, after the husband’s payment of $848.00 in child support. This amount is at the high range of the Spousal Support Advisory Guidelines (the “SSAGs”).

[7] Earlier in this litigation, the husband took the position that he should pay spousal support based only on his 2019 Line 150 income of $62,800.00. For a few months following the separation, he paid for some expenses to maintain the matrimonial home. Then commencing August 2020, he paid some child and spousal support based on that 2019 Line 150 income.

[8] After first refusing the wife’s several requests that they jointly retain a valuator to determine his income and value his business, and only after the wife retained Mr. Kwiatkowski to do so, the husband has now obtained his own income and valuation reports. He has changed his position and says his income for support is actually $147,629.00. Thus, he is prepared to have the Court adjust child and spousal support back to August 2020, using this revised income figure.

[9] However, the husband disputes that the parties’ eldest child, Jordyn, is entitled to child support. He says this even though she has just entered the fourth year of a four-year degree program. It appears that he is taking this position because she is 24 years old and has taken some extra time to compete her post-secondary education.

[10] The husband agrees that he has an obligation to pay child support for the parties’ middle child, Tyler, but he says this is so only during the summer months when she is home from school. Despite this concession, he only made one modest payment of $267.00 for Tyler’s support in August 2020 plus he gave her $400 in cash later that month. The husband did not pay any child support for Tyler after that, including when she returned home from school during the summer of 2021.

[11] The husband paid $430.00 per month for Tanner between August 2020 and August 2021. But again, this was based only on his 2019 Line 150 Income. In light of the husband’s position about his income at this motion, that amount of child support fell well below what he ought to have paid for Tanner.

[12] Regarding spousal support, the husband now agrees to pay also using his income of $147,629.00. However, he says the mid-range on the SSAGs is appropriate, in part because the wife should be encouraged to get a job and work. Additionally, he wants the Court to impute $25,000 to her, starting as of August 2020, even though she has not worked in over a decade. He says she could have worked in a grocery store or in retail during the last year. He says the amount of income he seeks to impute to the wife as of August 2020 amounts to less than minimum wage. As I will explain, this submission ignores both the circumstances of this marriage, and the reality of the Covid-19 pandemic.

[13] The husband did not specify in his written material the amounts of child and spousal support that he says the Court should order him to pay based on these positions, nor did he supply the Court with any DivorceMate calculations. Orally, the husband’s counsel said that in months where one child is entitled to child support, child support would be $1,281.00 per month and spousal support would be $3,167.00 per month. Where two children are entitled to child support, child support would be $2,049.00 per month and spousal support would be $2,811.00 per month. Going forward, during the months that the children are away at school, only spousal support of $4,471.00 per month would be payable.

[14] At their case conference held July 2, 2021, the parties agreed that the wife would receive her 50% share of the matrimonial home’s net sale proceeds on closing in November 2021, and that the husband’s share would be held in trust pending further agreement or Court Order. The wife now seeks an advance of $250,000.00 out of the husband’s share of the sale proceeds.

[15] Both parties filed draft Net Family Property Statements. Although some minor disputes remain and must be resolved for the parties to finalize their net family properties and therefore the equalization payment, there is no dispute that the husband will owe the wife an equalization payment. There is one and possibly two significant differences between their two positions that impacts the quantum of the equalization payment: the value of the husband’s business and any contingent taxes associated with that value. Regardless of the spread in their positions about these valuation issues and therefore the quantum of the equalization payment, the wife’s request for the advance is based on two principal arguments.

[16] First, the wife says that her equalization payment will be at least $250,000.00, the amount of the advance she is now seeking. According to the wife’s counsel, if the husband were to succeed on all of the property issues, his own position puts the equalization payment he would owe her at just over $300,000.00.

[17] Second, the wife says she has incurred debt that she needs to repay. She needs funds to continue with this litigation. She also is looking for housing for herself and the children, now that the matrimonial home has been sold.

[18] Although it is undisputed that the husband will owe an equalization payment, and although in my view a minimum quantum is ascertainable with a fair amount of certainty, the husband claims that the equalization payment is too uncertain. He also argues that the wife does not need an advance at this time either, since her share of the matrimonial home’s sale proceeds will be released to her soon.

PART II: SUMMARY OF THIS DECISION

[19] In this decision, I address the five main issues raised by counsel in argument. First, I will determine the husband’s income. Both parties rely on income reports from the valuators they retained. Although in my view there are legal issues about the use to which those reports may be put on an interim motion (which I address), I still would note the principal difference between the wife’s and the husband’s income reports concerns whether the husband earned unreported cash, and whether he ran personal expenses through the business that should be added back to his income and grossed up.

[20] For the reasons that follow, I would have actually found the husband’s income for the purposes of this motion only to be a few thousand dollars less than the lower figure of $147,629.00 that he argued for. I would not at this time determine the husband’s income to be either $189,000.00 as advocated by the wife, or one of the higher numbers set out in the wife’s valuator’s supplementary income report. Given the husband’s position that he is prepared to pay support based on $147,629.00, I will base temporary support on that figure, despite my slightly lower calculations at this stage of the case.

[21] For the benefit of the parties, my income determination for the husband, and my ultimate decision to adopt the husband’s position about income at this point, is based in part on the fact that this is a motion and not a trial. The determination of income at a motion will often be less precise given the more summary nature of the proceeding. My determination now may very well be too light and therefore be changed at trial. It may very well be that the trial judge will impute amounts for unreported cash sales to the husband, which I have decided against at this motion. There will be an opportunity for a more involved examination of all of the income issues at trial, with oral evidence, if the case does not settle beforehand.

[22] Second, I address the husband’s argument that income should be imputed to the wife. I find no merit to this argument whatsoever. I am dismissing his request and would not impute any income to the wife at this stage of the case.

[23] Third, I address the husband’s argument that Jordyn is not entitled to child support, and then I set out the differing amounts of child support that will be ordered in various months since August 2020. Based on the record that the parties placed before the Court, I find that Jordyn is still a child of the marriage, she has been entitled to child support since August 2020, and she continues to be entitled to child support.

[24] Fourth, I address why I intend to order spousal support at the high range of the SSAGs on this motion. Like the imputing issue, this aspect of my decision is based on the circumstances of this marriage, and the parties’ current circumstances. Among other reasons, I find the wife is entitled to spousal support on strong compensatory and needs’ bases.

[25] Finally, I will explain why I have found it appropriate to order an advance, but not the full $250,000.00 sought by the wife. Instead, I am ordering an advance of $200,000.00. I suspect the equalization payment owing to the wife will in fact exceed $250,000.00. Nevertheless, I will order this lesser amount out of an abundance of caution, in particular to provide some wiggle room for a potential tax issue, not yet addressed properly in the draft Net Family Property Statements. I am reducing the advance to $200,000.00, to ensure fairness to both sides. The husband’s position, that there should not be an advance, results in unfairness to the wife and does not acknowledge the role his own behaviour respecting the finances played in creating that unfairness. I also reject the husband’s argument that the wife’s “need” is already addressed through the release of sale proceeds about to be paid out to the wife.

PART III: BACKGROUND

A. Background of the Relationship

[26] The wife is 53 years old and the husband is 55. They were married for 27 years. Taking their almost two years of pre-marital cohabitation into account, the total length of the relationship is closer to 29 years.

[27] The parties separated on May 21, 2020. The next day, the husband gave to the wife a demand letter from his former lawyer. The husband moved out of the matrimonial home soon thereafter. The wife says he is in a new relationship.

[28] The parties have three children. As indicated earlier, Jordyn, age 24, is in her final year of a four-year degree program offered through Sheridan College in Oakville. Tyler, age 20, is in her second year at the University of Guelph. Tanner, who just turned 18 on September 14, 2021, is taking a gap year. Although he finished high school and works part-time at Wal-Mart, he is still living with his mother. He earns $15.00 for his part-time work. The wife says that Tanner plans to resume his education, in the fall of 2022.

[29] The wife was the children’s primary parent throughout the marriage. The wife worked as a flight attendant from October 1989 (prior to the birth of the children) until November 2001 (just after Tyler’s birth). The wife was then out of the workforce for 6 years, from November 2001 to October 2008. When Tanner was 5, the wife resumed working as a flight attendant, but that lasted less than 1 year. By June 2009, the wife left employment as a flight attendant once more. The wife says she did so at the urging of the husband, who wanted her to stay home and care for the children. She has not worked for the past 12 years.

[30] The husband is 55 years old. As set out earlier, he has operated as a franchisee since the 1990’s, and he worked in sales prior to that.

[31] The wife says the family enjoyed an “upper middle class” lifestyle prior to the separation. For example, she says the matrimonial home was unencumbered. The parties each had savings in RRSPs, and RESPs for the children’s education.

B. Prior Legal Proceedings

[32] On May 21, 2021, the husband gave the wife a “with prejudice letter” from a lawyer, saying that he would be seeking a valuation of his interest in the matrimonial home and telling the wife he would decide whether he would be purchasing her interest in the home. Otherwise, he said the house should be sold.

[33] On June 1, 2020, the wife responded through counsel, telling the husband to commence paying child and spousal support. Her counsel requested financial disclosure from the husband and objected to selling the matrimonial home until Tanner completed high school.

[34] Between July 13, 2020 and December 15, 2020, the wife’s counsel made some seven requests that the parties jointly retain a business valuator to prepare an income report and a business valuation. The wife commenced this proceeding on September 10, 2020. By December 16, 2020, the husband said he would not agree to jointly retain a business valuator. In January 2021, the wife decided to do so herself.

[35] On January 27, 2021, the wife’s lawyer sent the husband’s lawyer a list of disclosure that her valuator required. There was a case conference booked for July 2, 2021. The wife was clear that she wanted the reports prepared prior to that conference, but by the time it came, her valuator was only able to prepare preliminary reports because disclosure was still outstanding[^1].

[36] Meanwhile, the wife says the husband has provided information on a piecemeal basis. She says that her counsel had to make 10 follow up requests for information and documents between March 3, 2021 and June 28, 2021, and another four between July 20, 2021 and August 12, 2021. At the case conference on July 2, 2021, Fryer J. made a consent order that the husband provide certain additional disclosure to the wife’s valuator within 15 days.

[37] The husband denies that he delayed providing disclosure. His affidavit of August 20, 2021 does contain a detailed list of the disclosure he provided and the dates that he provided it. Despite what the husband has said about disclosure, in her reply affidavit of August 23, 2021, the wife maintains that the husband has continued to provide disclosure in stages, and further information and documents are still outstanding. For example, the husband provided more disclosure on August 12, 16 and 19, 2021. The husband eventually hired valuators and produced reports of his own, but not until mid-August, 2021. This has led the wife’s valuator to prepare addendum and reply reports as more information came in, I presume at an increased cost to the wife.

C. The Income and Valuation Reports

(1) The Income Reports

[38] Mr. Kwiatkowski prepared at least three reports that address the husband’s income[^2]. His reports are dated August 16, 2021 (the “First VSP Report”); August 23, 2021 (the “VSP Addendum Report”); and September 14, 2021 (the “VSP Reply Report”). It was in the First VSP Report, prepared before he had all of the disclosure, that Mr. Kwiatkowski determined the husband’s income to be $189,000.00.

[39] Mr. Kwiatkowski prepared the VSP Addendum Report after the husband provided the additional disclosure in late July and early August. He adjusted the husband’s 2020 income upwards, now to range between $208,000.00 or $238,000.00 depending on certain scenarios. Mr. Kwiatkowski did not have the husband’s valuators’ income report when he prepared the VSP Addendum Report.

[40] The husband retained Amir Rosenthal and Stephen Kertzman of Grunwald & Co. Their income report (the “Grunwald & Co. Report) is coincidentally also dated August 23, 2021, the same day that Mr. Kwiatkowski released the VSP Addendum Report. The Grunwald & Co. Report says the husband’s 2020 income for support is $147,629.00.

[41] There are some key differences in the approaches taken in the competing reports, including how the valuators treated the corporation’s pre-tax income, and how they dealt with the personal expenses and the allegation of unreported cash sales. After receiving the Grunwald & Co. Report, Mr. Kwiatkowski prepared the VSP Reply Report. It is a report in the nature of a critique of Grunwald & Co.’s analysis.

[42] Despite the higher income numbers in the VSP Addendum Report, the wife is still prepared to have the Court order support based on $189,000.00 for the purposes of this motion, since that is the figure she placed in her Notice of Motion. She says the husband’s income will be higher at trial. By contrast, the husband asks the Court to base support on his valuators’ number of $147,629.00.

(2) The Valuation Reports

[43] The parties each obtained reports to calculate the value of the husband’s business, too. Mr. Kwiatkowski’s separate valuation report is dated August 16, 2021. The Grunwald & Co. valuation report is dated August 23, 2021. Mr. Kwiatkowski’s Reply Report referred to above also contains a critique of the Grunwald & Co. valuation report.

[44] Mr. Kwiatkowski says the husband’s business is worth $760,000.00, whereas the Grunwald & Co. report values it at $435,924.00. Neither party asked their valuators to calculate any contingent taxes on the husband’s shares of the business, to be included in a Net Family Property Statement as a debt to the husband at the date of separation. I address the impact of this omission later, when considering the wife’s claim for an advance. In so doing, I also recognize that it is the husband’s onus to obtain appropriate evidence about his date of separation debts.

PART IV: ISSUES AND ANALYSIS

A. Applicable Legal Principles Concerning the Wife’s Motion for Temporary Child and Spousal Support

[45] The Court’s decision about temporary child and spousal support is governed by sections 15.1 to 15.3 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) as amended and various sections of the Federal Child Support Guidelines. As section 15.3(1) of the Divorce Act states, where the Court is considering an application for a child support order and an application for a spousal support order, the court shall give priority to child support in determining the applications. While I will deal with child support first, this is not a case where the Court is unable to make a spousal support order because the amount of child support is too great. That said, the amount of spousal support does fluctuate in months when more or less child support is paid. Below, I will explain the impact of child support on spousal support in the different months.

[46] At ¶ 14 of Politis v. Politis, 2015 ONSC 5997, Harvison Young J. (as she then was) summarized certain principles applicable on an interim motion for spousal support. She wrote:

1. On applications for interim support the applicant's needs and the respondent's ability to pay assume greater significance;

2. 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 to pay warrants it;

3. On interim support applications the court does not embark on an in-depth analysis of the parties' circumstances which is better left to trial. The court achieves rough justice at best;

4. The courts should not unduly emphasize any one of the statutory considerations above others;

5. On interim applications the need to achieve economic self-sufficiency is often of less significance;

6. Interim support should be ordered within the range suggested by the SSAGs unless exceptional circumstances indicate otherwise;

7. Interim support should only be ordered where it can be said a prima facie case for entitlement has been made out; and

8. Where there is a need to resolve contested issues of fact, especially those connected with a threshold issue, such as entitlement, it becomes less advisable to order interim support.

[47] All of these factors from Politis v. Politis were not specifically referred to by counsel during submissions, although counsel did argue some of them. Not all of the principles needed to be argued. For example, the issue of entitlement is conceded. In this decision, I am focusing on the contested issues. But I note two things in particular.

[48] In regards to the criterion in ¶ 14(8.) of Politis v. Politis, there are contested issues of fact in issue on this motion, especially concerning the husband’s income. While they are not threshold issues like entitlement, I am still be mindful of the criterion in ¶ 14(3.) of Politis v. Politis. In motions court, the Court’s ability to do a deeper dive into the income of a self-employed payor is sometimes limited. That said, in the specific circumstances of this case, I find that the Court is able to deal with some of the arguments about the husband’s income, but not all of them. In particular, I find that I am able to deal with the arguments about the personal expenses, but the wife’s allegations about unreported cash sales will have to wait until trial. In part, that is due to the fact that both sides are seeking to rely on the opinion of proposed “litigation experts”, the evidence about the alleged unreported cash is conflicting, and there are a number of other witnesses who will have relevant evidence about it.

[49] Similarly, I would not impute an income to the wife on this motion. While I cannot and would not prevent the husband from pursuing that issue at trial, I find very little merit to an imputing argument, at least at this stage of the case.

B. The Use of the Valuators’ Reports on these Motions

[50] Both parties have attached their valuators’ reports as exhibits to their affidavits for this motion. The parties will obviously seek to tender their valuators as “litigation experts” at trial. In the ordinary course, reports of this nature are intended for use at trial. Such reports will of course also aid the parties in their settlement discussions. But this was an interim motion.

[51] I recognize that rule 20.2(15) of the Family Law Rules, added to the rules in 2019, now provides that expert opinion evidence may be used on motions for temporary orders. While rule 20.2(15) does speak about the use of expert opinion evidence at a motion, its wording is largely directed at the timelines for serving and filing reports for use on motions, as opposed to the timelines that apply in advance of a trial. Whether rule 20.2(15) provides any additional guidance about the procedure to be applied for the use of expert opinion evidence on a motion has received very little judicial treatment in Ontario decisions.

[52] I am aware of four cases that have specifically considered the application of rule 20.2(15), and another one that addresses related issues without specifically referring to the rule: see Children’s Aid Society of Algoma v. S.B., 2019 ONCJ 815; J.K.L.D. v. W.J.A., 2020 ONCJ 335; LaRoche v. Lynn, 2019 ONSC 6602; L.D. v. A.E., 2020 ONCJ 417; and see also Simcoe Muskoka Child, Youth and Family Services v. A.H., 2021 ONSC 2789. I am also aware of some decisions that pre-date the enactment of rule 20.2(15), but which still provide some assistance.

[53] In both J.K.L.D. v. W.J.A., a previous decision of mine, and in LaRoche v. Lynn, and unlike in this case now before me, the reports in issue were medical reports from health care practitioners. The issue in those cases concerned whether the reports were admissible in evidence for use at motions, since they were just attached as exhibits to affidavits, but in an unsworn form.

[54] As the medical reports were both the reports of “participant experts” within the meaning of rule 20.2 of the Family Law Rules, and practitioners reports pursuant to s. 52 of the Evidence Act, the Courts in those decisions held that that evidence is treated differently at law from that of a “litigation expert”, and the reports were admissible. Those two decisions provide some guidance about how a practitioner’s report, that also qualifies as a participant expert’s report, may be admitted into evidence at a motion. They do not address questions about a litigation expert’s qualifications, nor how the Court may receive opinion from that kind of expert at a motion where there is not normally an opportunity to have a voir dire with oral evidence about qualifications and admissibility.

[55] In Simcoe Muskoka Child, Youth and Family Services v. A.H., Krause J. followed J.K.L.D. v. W.J.A., and LaRoche v. Lynn to admit another report that was also both a participant expert’s report and a practitioner’s report, but this time at a motion for summary judgment[^3]. In so doing, she noted once more, that rule 20.2(15) allows for expert evidence on motions, including at a motion for summary judgment. She also cited section 52 of the Evidence Act. In so doing, she also drew a distinction between how the report of a “participant expert” may be introduced at a summary judgment motion, versus that of a “litigation expert”, noting the Ontario Court of Appeal’s decision in Sanzone v. Schecter, 2016 ONCA 566. In Sanzone v. Schecter, the Court of Appeal stated that for a summary judgment motion, a litigation expert’s report had to be sworn.

[56] But Krause J. did not have before her a litigation expert’s report and Sanzone v. Schecter does not address how the evidence of a litigation expert may be received at an interim motion. Nor does it address, even if that evidence is in sworn form, how a litigation expert gets qualified and how other admissibility issues are addressed, when the procedure is a motion.

[57] Although he did not specifically refer to rule 20.2(15), in Children’s Aid Society of Algoma v. S.B., 2019 ONCJ 815, Kukurin J. did address to some extent how the Court may receive the opinion evidence of a proposed litigation expert at a motion based on affidavit evidence. In that case, the Society had attached to its affidavit in support of a summary judgment motion, the report of a proposed litigation expert. Kukurin J. began by noting that the parties had not sought to rely on any of the rules that might have permitted oral evidence to ask for a voir dire to address qualifications and admissibility. Instead, the Society had just asked him to qualify the witness, based on the documentary record, including her report and curriculum vitae. In the end, and in the absence of being asked to hear oral evidence, Kukurin J. held a form of a voir dire based on the written record and the submissions. He determined that witness was able to offer opinion evidence on some, but not all areas proposed.

[58] Finally, in L.D. v. A.E., another previous decision of mine, one of the parties initially proposed to tender the report of a therapist as a litigation expert’s report at an interim motion. Having been initially told that expert opinion evidence of a litigation expert would be tendered, I considered whether there needed to be oral evidence on the motion, in part so there could be a voir dire to address qualifications prior to accepting any such opinion evidence. Ultimately, I declined to hear oral evidence, in part because I found the proposed therapist was not actually a litigation expert after hearing submissions about the need for oral evidence.

[59] I am also aware of some cases that pre-date the enactment of rule 20.2(15), in which courts have insisted upon a voir dire, prior to receiving opinion evidence at an interim motion. For example, in Catholic Children’s Aid Society of Toronto v. R.M., 2017 ONCJ 661, Sherr J. held there should be a voir dire, prior to admitting scientific testing evidence (ie. urine drug testing) in a child protection proceeding. Sherr J. did so to ensure the Court exercised its gatekeeping role properly, notwithstanding the statutory context of a temporary care and custody hearing in a child protection proceeding, where there is a relaxed evidentiary standard[^4].

[60] Perhaps on the other hand, in J.D. v. N.D., 2020 ONSC 7965 and again in Jonczyk v. Tilsey, 2021 ONSC 2546, MacKinnon J. addressed the use to which assessment reports may be put on a motion. She suggested that the previous case law, that an assessment report is to be used at trial, and therefore that a status quo would not normally be changed prior to trial based on such a report, may have softened.

[61] I also note that MacKinnon J. cited ¶ 32 of the decision of Chappel J. in Matsinda v. Batsinda, 2013 ONSC 7869, wherein Chappel J. said that the caution surrounding the use of assessment reports on motions applies primarily to their conclusions and recommendations, rather than the facts, observations and other evidence set out or summarized in the report. The underlying summaries of the evidence may be of considerable value to the motions judge.

[62] At this motion, neither side made any submissions about the use to which the competing reports of the valuators may or may not be put at this stage of the case. Neither side made submissions about the procedure the Court should follow, if any, before relying on the opinion evidence of a proposed litigation expert at an interim motion. Neither side argued whether there ought to have been a voir dire prior to the Court receiving this evidence, nor did they address what the impact of the valuators not yet being qualified to give expert opinion evidence should be, at this stage of the case. Instead, both parties made extensive submissions about the contents of the competing reports, about the differences between them, and they each urged the Court to adopt one income figure or another contained therein.

[63] Both Mr. Kwiatkowski and Mr. Kertzman are known to this Court. It appears to the Court that their reports comply with the formal requirements of rules 20.2(2) and (4) of the Family Law Rules. They have each signed the Acknowledgement of Expert’s Duty Form. But this is not a trial, and they have not yet been qualified to testify as experts. And this is not a parenting case; there are different best interests’ considerations in parenting cases than the considerations that apply here and that may call for a different approach.

[64] Under the circumstances, I find the Court should be cautious about making pronouncements one way or the other, about the substance of the reports and the opinion contained therein. That said, the reports still have some utility at this stage of the case. By analogy to Chappel J.’s commentary at ¶ 32 of Matsinda v. Batsinda, the reports contain useful summaries of the data reported on the husband’s income tax returns, as well as in his various accounting ledgers. The reports digest the information and saved the parties from having to file even lengthier source documents for this motion. I find that the Court is able to resolve some factual questions on this motion, at least on a so-called “rough justice” basis, until there may be a voir dire and then oral evidence at trial. The Court may do so without relying or making findings based on the opinion of either Mr. Kwiatkowski or Messrs. Rosenthal and Kertzman in the reports. The Court is able to apply the sections of the Federal Child Support Guidelines that deal with the determination of income to the evidence summarized in the reports, and draw its own conclusions about the husband’s income, at this stage of the case.

[65] Mr. Kwiatkowski’s reports add to the husband’s income gross up amounts for the tax savings on unreported cash, and on the personal expenses the husband ran through the business. To the extent that this calculation falls within the purview of the opinion evidence of a litigation expert, and while it may be preferable to have that evidence from a qualified expert at trial, at this stage of the case, the Court is also able to perform its own gross up calculations using DivorceMate: see Hudson v. Simoni, 2017 CarswellNfld 51 (S.C.T.D.) at ¶ 273-274. For the purposes of this motion, the Court would have to do its own calculation anyway, since I have decided that some, but not all of the amounts proposed in Mr. Kwiatkowski’s report should be added back to the husband’s income. The amount of the tax gross up is based on the husband’s personal marginal tax rate. That rate changes as there are changes to the his income.

[66] The value of the husband’s business is a significant component of his net family property and therefore the equalization payment. But insofar as the wife’s request for an advance is concerned, the Court does not need to ultimately determine what that value is, which necessarily entails reliance on the opinion. That will be done at trial. Rather, at this point the Court must be satisfied that the husband will not be prejudiced if the wife receives an advance, for example, were the Court to release too much money to her. The competing reports are therefore helpful because they identify the ranges of the business’ value. With those ranges, the Court is able to determine what the husband’s ‘best-case’ scenario on equalization might be. And that aids me in my determination about whether the wife may have an advance.

C. The Determination of the Husband’s Income

(1) The Governing Sections of the Federal Child Support Guidelines

[67] Section 2(3) of the Federal Child Support Guidelines states that where, for the purposes of these Guidelines, any amount is determined on the basis of specified information, the most current information must be used. Sections 15 to 20 provide a framework for the determination of the husband’s income for child support. This framework may also be used for the determination of income for spousal support. See Spousal Support Advisory Guidelines: the Revised Users Guide, April 2016, Chapter 6, page 18.

[68] The principal disputes between the parties about the husband’s income implicitly revolved around the application of sections 19(1)(d), (g) and perhaps (h) of the Federal Child Support Guidelines, even though those sections were not always referred to in argument. Those sections state that the Court may impute such amount of income to a spouse as it considers appropriate in the circumstances, including where: (d) it appears that income has been diverted which would affect the level of child support to be determined under the Guidelines; (g) the spouse unreasonably deducts expenses from income; and (h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax. Section 19(2) of the Federal Child Support Guidelines makes it clear that in cases involving section 19(1)(g), just because a deduction may be allowed under the Income Tax Act does not necessarily mean it will be a reasonable deduction when determining income for support.

[69] Section 18 of the Federal Child Support Guidelines was also raised implicitly, because the valuators appear to have taken different approaches to the attribution of the corporation’s pre-tax income to the husband, for the purposes of calculating his income for support. Section 18(1) provides that if the Court is of the opinion that the husband’s income does not fairly reflect all the money available to him for the payment of child support, the Court may consider section 17 and add all or part of the corporation’s pre-tax income for the most recent taxation year, or an amount commensurate with the services that the husband provides to the corporation, provided it does not exceed the corporation’s pre-tax income.

(2) An Overview of the Contents of the Valuators’ Income Reports

[70] The First VSP Report sets out Mr. Kwiatkowski’s calculations of the husband’s income for the years 2018 to 2020. Although it contains a three-year historical review of the husband’s income and Mr. Kwiatkowski provides some scenarios whereby the husband’s income might be averaged under section 17 of the Federal Child Support Guidelines, argument at this motion focused exclusively on the husband’s 2020 income. Both sides agree that the Court should base its temporary Order on the husband’s 2020 income, whatever it determines it to be.

[71] Mr. Kwiatkowski’s analysis for the husband’s income follows the structure found in sections 15 to 20 of the Federal Child Support Guidelines. He begins with the husband’s 2020 personal income, reported to the Canada Revenue Agency. That consists of a small amount of employment income of $3,500.00 that the husband paid himself, the dividends that he took from the company, and some CERB income of $4,000.00 that he received in 2020.

[72] Both the First VSP Report and the VSP Addendum Report summarize the disclosure that Mr. Kwiatkowski reviewed and the analysis that he performed to conclude that the amounts for unreported cash sales and personal expenses paid through the business should be added back. There is also a gross up for tax on those amounts added back. The VSP Addendum Report includes additional personal expenses and new gross up calculations, after Mr. Kwiatkowski received the additional disclosure from the husband in late July/early August.

[73] In both reports, Mr. Kwiatkowski determined that some of the corporation’s pre-tax income should be attributed to the husband pursuant to section 18 of the Federal Child Support Guidelines. In the First VSP Report, Mr. Kwiatkowski determined that $52,484.00 was the appropriate amount. In the VSP Addendum Report, Mr. Kwiatkowski adjusted this number down to $35,583.00 after it was revealed that the accountant had made certain accounting errors and there was therefore less pre-tax income available for distribution. In both scenarios, Mr. Kwiatkowski proposed that 40% of the corporation’s pre-tax income be attributed to the husband.

[74] The Grunwald & Co. Report lays out the husband’s income differently, although the valuators reach similar conclusions about some of the calculations. The Grunwald & Co. Report concludes that the husband’s 2020 income was $147,629.00. Based on the Schedule labeled as Exhibit A, the Grunwald & Co. Report appears to have taken all the corporation’s pre-tax income for the year, that would have been available for distribution to the husband, had he not taken dividends or taken any salary, and characterized it as income available to the husband.

[75] Although it is laid out differently, both valuators clearly agree in the result (and the Federal Child Support Guidelines would require) that the husband’s income at least consists of the salary the husband paid himself, and the dividends that the husband took out of the company. The Grunwald & Co. Report does not include the CERB income that the husband received in 2020. More significantly, it contains little to no analysis about the allegations of unreported cash or personal expenses. And while the valuators agree in principle that some of the corporation’s pre-tax income should attributed to the husband’s income under section 18(1) of the Federal Child Support Guidelines, the manner in which the Grunwald & Co. Report lays this out is confusing. As I will explain, the Grunwald & Co. Report both states that it would inappropriate to attribute 100% of the corporation’s pre-tax income to the husband (which Mr. Kwiatkowski did not do in any event), but then it inconsistently goes on to attribute 100% of the corporation’s pre-tax income to the husband.

(3) Analysis Respecting the Wife’s Allegation that the Husband Earns Unreported Cash

[76] While I would find the wife’s claims of unreported cash sales certainly amount to more than a mere allegation and they are deserving of further exploration at trial, I would not impute an income to the husband based on unreported cash sales at this stage of the case. I reach this conclusion cautiously, for the following reasons.

[77] The First VSP Report contains two scenarios whereby Mr. Kwiatkowski added estimates of unreported cash sales to the husband’s income and then grossed up those estimates for tax. In the first scenario, Mr. Kwiatkowski added 5% of total sales to the husband’s income as unreported cash, and in the other, he added 7%. The $189,000.00 figure for which the wife argues, includes $40,000.00 of alleged unreported cash sales, plus a gross up. That is the 5% scenario.

[78] Mr. Kwiatkowski’s initial gross up calculation on the cash sales of $40,000.00 resulted in him adding an additional $19,068.00 to the husband’s income. To reach that number, he used a personal marginal income tax rate of 32.28% for the husband. But also in the Frist VSP Report, Mr. Kwiatkowski added back $26,145.00 in personal expenses to the husband’s income grossed up by $12,463.00, again using that 32.38% tax rate. In the VSP Addendum Report, Mr. Kwiatkowski revised the personal expenses to be added back up to $47,853.00. He made the downward adjustment to the amount of corporate pre-tax income to be attributed to the husband, referred to earlier. In the result of these adjustments, Mr. Kwiatkowski revised the personal marginal tax rate for the gross up to 35.03%. The new gross up amounts for the cash and the expenses became $21,568.00 and $25,802.00 respectively.

[79] I note that the First VSP Report states that it was the wife who raised a concern that the husband conducted cash sales. But Mr. Kwiatkowski says he did not just rely on the wife’s say-so. The First VSP Report says that he conducted a “detailed lifestyle analysis in this matter for the 2020 fiscal year”. Schedule 3 to the First VSP Report appears to be a detailed accounting of the amounts spent or charged on various bank and credit card expenses, less the amounts covered by the sources of income coming into the household to pay for those amounts. Separately on Schedule 3H to the Frist VSP Report, Mr. Kwiatkowski says he reviewed total bank deposits, compared those to sales, and made accounting adjustments, to ascertain any shortfalls in income to cover the spending.

[80] The first lifestyle exercise appears to have revealed that there is as much as $56,959.77 in spending unaccounted for (that is the 7% figure). The second exercise revealed that there had been $40,625.54 in deposits exceeding sales (that is the 5% figure). Again, for the purposes of this motion, the wife is content that this Court attribute the lower amount of $40,000.00 to the husband, with a gross up.

[81] The wife relies on cases in her factum where Courts have imputed an income based on lifestyle grounds to argue for the $40,000.00 addition to the husband’s income, plus a gross up. For example, in Iacobelli v. Iacobelli, 2020 ONSC 3625, the Court held that, “…where there is no other source of funds from which lifestyle can be maintained, then the reasonable inference must be that a family’s lifestyle was funded by the income of the payor, especially where, in the present case, the sole wage earner was that payor and the expert has examined whether the lifestyle could have otherwise been funded through capital expenditures.”

[82] The wife also points the Court to a previous decision of mine, E.S.R. v. R.S.C., 2019 ONCJ 381, wherein I analyzed lifestyle, the sources of funds coming in, and spending patterns to reach conclusions about imputing.

[83] I accept that the Court may impute an income based on lifestyle and spending patterns: see for example E.S.R. v. R.S.C. ¶ 404-405. And on the one hand, the Grunwald & Co. Report does not really address the allegations about unreported cash. Its authors mostly say they relied on the husband’s information that there had not been any unreported cash sales. This is not responsive to Mr. Kwiatkowski’s work.

[84] However, in his affidavit of August 20, 2021, the husband himself denies that he engaged in unreported cash sales. He points out that he sells inventory. He says that when his customers purchase tools and/or equipment in cash, he deposits the cash into the company’s bank account. He says that he must issue receipts because his customers require them for their input tax credits in their own HST filings. Moreover, he says he is obligated to run all sales, goods and inventory through the Snap-On Tools’ sales software, which sends reports to Snap-On Tools periodically on sales and inventory. He says it is not possible not to report for a sale, as Snap-On Tools requires regular reconciliations.

[85] In his affidavit of October 8, 2021, the husband further says that Marc Beaulac, the North American Account Manager for Snap-on Tools, spoke to one of the valuators at Grunwald &Co. and confirmed that there are no concerns about unreported sales. Apparently, Mr. Beaulac reviewed the husband’s inventory and sales and found no anomalies.

[86] Some elements of the husband’s explanation in response to the allegation of unreported cash sales, such as the requirement of a franchisee to account and reconcile with Snap-On Tools’ head office, make some sense. On the other hand, Mr. Kwiatkowski appears to have done a painstaking analysis and has revealed some anomalies. And it was further revealed that the husband’s accountant suddenly made a correction to the husband’s financial records, after receipt of Mr. Kwiatkowski’s analysis, and adjusted $40,000.00 to the company’s account receivables to eliminate the discrepancy between the sales and deposits.

[87] The cases upon which the wife relied to impute an income based on lifestyle are all trial decisions. I do not intend to say that lifestyle arguments can never lead to imputing at an interim motion. I also tend to agree with the wife’s counsel’s submission that the accountant’s sudden correction to the account receivables, which just happens to match the amount of unreported cash the wife seeks to impute to the husband, is suspect.

[88] In the result though, I am not prepared to find on a motion of this nature that unreported cash sales should be imputed to the husband and grossed up. This is one of the issues that is best left to trial. None of the source documents that formed part of Mr. Kwiatkowski’s detailed analysis were placed before the Court. To properly consider this issue fairly to both sides, the trial judge will likely need to see those source documents. He or she will need to hear from the parties themselves and from Mr. Kwiatkowski, but also from Mr. Beaulac and the accountant.

[89] While I would not find it to be fair to the husband for the Court to impute an income to him based on unreported cash at this time, it will be open to the trial judge to go back retroactively and make an upward adjustment to the support that I am ordering, if the evidence comes out at trial in the fashion that the wife anticipates it will.

[90] However, my conclusion about the personal expenses is different, because the evidence before the Court is different. I address that next.

(4) Analysis Respecting Personal Expenses

[91] Mr. Kwiatkowski’s analysis in the Frist VSP Report is less precise and is based on some assumptions. That was before he was given additional disclosure. Once the additional disclosure was provided, Mr. Kwiatkowski was able to revise the numbers for VSP Addendum Report. He says his analysis is “based on a detailed review of the supporting documents provided”. I agree that a number of expenses that the husband ran through the business are obviously personal in nature, that they should be added back to the husband’s income for 2020, and grossed up.

[92] First, before the close of the company’s fiscal year end 2020, the husband expensed $12,260.00 in legal fees pertaining to this separation. Those expenses were buried in the category “tool repairs”. When Mr. Kwiatkowski discovered this, the husband’s accountant then acknowledge this was an error. That may be, but legal fees paid for personal litigation are not a proper business deduction and they are certainly not “tool repairs”.

[93] Second, the husband expensed $3,849.00 for heating fuel and the alarm system for the matrimonial home, as well as minor personal purchases and payments for dental services, prescriptions and personal income taxes. These amounts were expensed through the business as “office and general” expenses. These are personal in nature and should not have been expensed through the business.

[94] Third, the husband uses a van for work, and occasionally a truck. The husband ran truck expenses through the business in greater proportion than his business use of the truck. He expensed a series of expenses relating to another vehicle, which is not used for business purposes at all. There are $13,400.00 in vehicle expenses, which I find should be added back to his income and grossed up.

[95] Fourth, the husband expensed telephone company expenses, which included the matrimonial home’s landline, internet and satellite TV, and cell phones for the wife and the parties’ children. Since the telephone company bills did not have a detailed breakdown, Mr. Kwiatkowski estimated that 50% of the cell phones pertained to business use, and about 10% of the internet did also. He added back the balance of the invoices. I find the assumptions he made to have been reasonable. This amounts to an add back of $8,195.00.

[96] Fifth, the wife told Mr. Kwiatkowski that family meals were sometimes expensed through the business, that the husband did not take customers out for lunches or dinners, and that he would sometimes expense his own lunch costs. Mr. Kwiatkowski then discovered from a review of the disclosure that the husband ran meals and entertainment through the business. Mr. Kwiatkowski assumed that meals and entertainment expenses in excess of $30.00 were personal in nature. The husband did not meaningfully address this in his responding materials. He did not explain why he needs to entertain clients, as the owner of a franchise that sells tools. I find his add back of $4,100.00 to be reasonable.

[97] Sixth, there was an expense for supplies in 2020 of $49.00. Mr. Kwiatkowski’s report says that pertained to repair costs for the matrimonial home. That too should be added back.

[98] Unhelpfully, the Grunwald & Co. Report contains no analysis about personal expenses. The husband’s valuators relied on the husband’s say-so that he did not expense any personal amounts through the business. According to the report, the husband did not instruct Grunwald & Co. to audit or to seek external verification of the information the husband or his representatives supplied.

[99] The husband’s own responses in his affidavit and in argument were general in nature and not really addressed at the specific categories of expenses added back. For example, the husband’s counsel attempted to argue that all personal expenses were run through his shareholder’s account and that he would pay these amounts back at the end of the year. Otherwise, she said, the Canada Revenue Agency would have deemed these amounts as income to him, and that never happened. The problem with the husband’s argument is that Mr. Kwiatkowski reviewed the accounting ledgers, and the above expenses for the year end 2020 were not expensed in the shareholder’s account. They were expensed in the very categories that I have just described (ie. tool repairs, office expenses, vehicle expenses, telephone expenses and meals and entertainment).

[100] Still, I have not added back every expense that Mr. Kwiatkowski would add back. I do not add back the deduction that the husband took for a home office. The evidence is that the husband principally works out of his vehicle. He used to do some paperwork out of the matrimonial home, and he used to use the matrimonial home for the storage of his inventory. Therefore, the husband deducted $6,000.00 for a home office. It appears that he assigned this amount as an estimate. The wife’s counsel argued that this expense is not precise, nor it is incremental in nature (meaning that the household expenses would have remained the same regardless of any business use of the home). However, I accept that the husband does have to do some work out of the home. And it may be, for example, that the husband would have had to incur a rental expense for storage for inventory were it not for the matrimonial home. This expense, which I will allow, along with any others that I have disallowed, may be explored further at the trial, notwithstanding my treatment of the expenses at this interim stage of the case.

[101] I therefore find that the sum of $41,853.00, being the aggregate of the aforementioned expenses (other than the home office expense) should be added back to the husband’s income and grossed up.

(5) Analysis Respecting the CERB Received by the Husband in 2020

[102] The Grunwald & Co. Report does not include the $4,000.00 in CERB payments that the husband received in 2020, whereas the First VSP Report and the VSP Addendum Report do. I appreciate that CERB has now ended and the husband will not receive this in 2021. However, some of the support payments that I am ordering the husband to make are for months in the 2020 calendar year. Moreover, it may very well be that going forward, the husband will pay child and spousal support based on the previous year’s income. In the future when there is an adjustment to the husband’s income for the next year’s support (or in any settlement discussions or at trial), it will likely be appropriate for the parties or the Court to remove from the husband’s income the $4,000 from CERB. At this time, I have left it in.

(6) The Corporation’s Pre-Tax Income

[103] During argument, the wife’s counsel argued that even if the Court adds nothing back to the husband’s income on account of unreported cash, the personal expenses to be added back are of such a magnitude that the husband’s income will exceed the $189,000.00 figure in her Notice of Motion anyway. To illustrate this, the wife’s counsel suggested that the Court could easily take the $147,629.00 number proposed in the Grunwald & Co. Report, and add the expenses and the gross up. Counsel argued the Court could even take a fraction of the personal expenses and apply the gross up, and the result would still be well north of the $189,000.00 figure that the wife proposed. While I found the simplicity of that approach to be initially attractive, upon further reflection this would not result in a fair treatment of the corporation’s pre-tax income pursuant to section 18(1) of the Federal Child Support Guidelines.

[104] In his analysis, Mr. Kwiatkowski started with what the husband actually reported on his tax returns. After recognizing that the corporation had already paid out salaries and dividends and accounting for that, Mr. Kwiatkowski determined what amount remained of corporate pre-tax income, and then what percentage of it should be attributed to the husband as income for support. He decided upon 40%.

[105] In the body of the Grunwald & Co. Report, the authors write that all of the corporation’s pre-tax income should not be attributed to husband (which again, Mr. Kwiatkowski did not do). They say the husband needs to purchase a new van for business use. They also say that if all of the corporation’s pre-tax income was attributed to him, there would be a “working capital deficiency”.

[106] However, by approaching the determination of the husband’s income in the manner explained above (ie. treating the husband as if he had not taken a salary or any dividends, calculating the corporation’s pre-tax income in such a scenario and concluding that would be the husband’s income for support in 2020), the Grunwald & Co. Report effectively went on to treat all of the corporation’s pre-tax income as available to the husband personally.

[107] Even though Mr. Kwiatkowski did not propose to attribute 100% of the corporation’s pre-tax income to the husband in either of his reports, upon receipt of the Grunwald & Co. Report, Mr. Kwiatkowski made inquiries relevant to the section 18(1) issue. As explained in the VSP Reply Report, he inquired about the husband’s need for a new van. He reports that financing is available through Snap-on Credit’s Franchise Finance Van Loan Program or from third parties (this is also stated in the Grunwald & Co. Valuation Report). Mr. Kwiatkowski is of the view that none of the corporation’s pre-tax income is needed for this purchase. And in regards to the comment in the Grunwald & Co. Report about the need for working capital, again Mr. Kwiatkowski only attributed 40% of the corporation’s pre-tax income, whereas curiously, the Grunwald & Co. Report attributed 100%, in the result.

[108] Whether all, or only a portion of the corporation’s pre-tax income is available to the husband for support, is an issue for trial. I need not on this motion decide conclusively whether it should be 40%, or 100%, or some other amount. But were the Court to take the approach ultimately advocated by the wife’s counsel, that it add the personal expenses to the income number in the Grunwald & Co. Report, it would effectively be attributing 100% of the corporation’s pre-tax income to the husband plus the expenses, when even the wife’s own valuator recommended a more conservative figure.

[109] In the absence of a proper number for pre-tax corporate income from Grunwald & Co., and in the absence of evidence or a suggestion from the husband, I am left with only the number suggested by Mr. Kwiatkowski at this time. For consistency, the expenses, the gross up and Mr. Kwiatkowski’s number for corporate pre-tax income need to be added to the other sources of income that the husband had (summarized in Mr. Kwiatkowski’s reports), not added to the bottom line in the Grunwald & Co. Report, which already includes pre-tax income in a greater percentage.

(7) Conclusions Respecting the Husband’s Income

[110] For the purposes of this motion, I would have found that the husband’s 2020 income should include the salary he paid himself, the CERB he received, the dividends he took, $41,853.00 in personal expenses added back, and a gross up on the personal expenses. I would not just add the personal expenses to the number in the Grunwald & Co. Report, because as I just explained, that would be tantamount to the Court attributing all of the corporation’s pre-tax income to the husband, something which neither valuator suggests is appropriate. I would therefore use Mr. Kwiatkowski’s figure of $35,583.00 for corporate pre-tax income to be attributed to the husband, too. That number comes from the VSP Addendum Report, and I would select it for the reasons just expressed, principally because no alternative was really proposed.

[111] I have prepared a DivorceMate calculation based on these inputs. I attach it as Schedule “A” to this decision. My calculation also includes a small tax deduction of $277.00 for carrying charges that the husband took on his personal tax return for 2020.[^5] Based on my findings and calculation, the husband’s adjusted income is $143,027.00[^6], about $4,000.00 less than the amount the husband argued his income should be. Since my calculation is close to the husband’s own position at this motion, I will instead base temporary support on the figure of $147,629.00 that he proposed.

D. Whether Income Should Be Imputed to the Wife

[112] I turn next to the husband’s argument that income of $25,000.00 should be imputed to the wife, retroactively to August, 2020.

[113] The husband relies on section 19(1)(a) of the Federal Child Support Guidelines to impute an income to the wife. Pursuant to that section, the Court may impute an income to a spouse where the spouse is intentionally under-employed or unemployed, other than where the under-employment or underemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse.

[114] The husband also relies on Drygala v. Pauli, 2002 CanLII 41868 (ON CA), 2002 CarswellOnt 3228 (C.A.) to impute an income to the wife. But there are some key differences between Drygala v. Pauli and this case before me.

[115] Drygala v. Pauli considered a child support payor’s underemployment to pursue education, and whether income should therefore be imputed under section 19(1)(a) for his payment of child support, while he pursued the education. Drygala v. Pauli, as with many of the imputing cases, considered whether income should be imputed to a child support payor, not a support recipient. The case is decided through the lens of the objectives of the Child Support Guidelines.

[116] Although some of the criteria might require some modification to address the different context in this case before me, in general the test from Drygala v. Pauli provides:

(a) It is not necessary to find bad faith;

(b) There is a duty to seek employment; and

(c) If income is to be imputed, there must be a rational basis for the figure selected. The Court must consider what is reasonable in the circumstances, including age, education, experience, skills, health , the availability of job opportunities, the number of hours that could be worked in light and the hourly rate that the parent could reasonably be expected to obtain.

[117] In Tillmans v. Tillmans, 2014 ONSC 6773 (S.C.J.), Pazaratz J. summarized a number of the principles from the case law interpreting section 19(1)(a) of the Guidelines, including those cited above. In addition, the cases he referred to (again decided in relation to support payors) provide that:

(a) The onus falls on the party requesting that income be imputed to provide an evidentiary basis upon which a quantum can be imputed. Se Homsi, v. Zaya, 2009 ONCA 311 at ¶ 28;

(b) Once intentional underemployment is found, the payor (or I suppose in this case the wife) must show that what she has been doing to earn an income is reasonable; and

(c) The party (in this case the wife) cannot engage in reckless behaviour which diminishes income earning capacity.

[118] In this case before me, the husband is not seeking to impute an income to the wife for child support. He seeks to impute an income to the wife to reduce his spousal support obligation. That is not to say that section 19(1)(a) type considerations cannot apply in this context, but they may differently apply. His argument may be based more so on section 15.2(6)(d) of the Divorce Act, which says that a spousal support order should, in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

[119] Very recently, in Rankin v. Rankin, 2021 ONSC 4537, Kiteley J. noted this distinction, between imputing income to a child support payor versus a spousal support recipient. The case before Kiteley J. also concerned whether it is appropriate to impute an income to a recipient on an interim motion.

[120] In Rankin v. Rankin, the parties had separated after a lengthy marriage. The wife was self-employed as a cello teacher, earning nominal income. The parties were each in their 50s at the time of separation. The husband earned significant income.

[121] Kiteley J. declined to impute an income to the recipient. At ¶ 53-54, she noted that many of the decisions that had been supplied to her were trial decisions, or decisions where income had been imputed to a support payor. She then said, “[o]n a motion for temporary support the task of imputing income to the support recipient requires an in-depth analysis as to ability to earn more professional income or in investment income. It is contrary to the expectations on a motion for temporary support for the court to undertake that analysis.” In this regard, her reasoning also aligns with ¶ 14(3.) of Politis v. Politis.

[122] Kraft J. reached a similar conclusion in Lidell-MacInnis v. MacInnis, 2021 ONSC 1787. Once again in that case, the husband argued that income should be imputed to the recipient wife in response to a spousal support claim. The facts were that the parties had three children, ranging in age between 17 and 22. The wife who was 49, only had a high schedule education and a legal assistant diploma, obtained many years ago. She had been out of the workforce for 17 years. During the marriage, the wife taught some dancing courses, but earned nominal income. She had been the primary caregiver for the parties’ children. By contrast, the husband was a chartered accountant and a partner at a large accounting firm. He was the primary income earner for the family. See ¶ 8 -10.

[123] At ¶ 75, Kraft J. acknowledged that income may be imputed to a recipient on a motion, but like Kiteley J., she found the Court should exercise caution in so doing. She recognized that the particular facts of a case may call for imputing, such as in cases involving a clear refusal to work, or “clearly insufficient efforts on their part to contribute to their expenses during the interim period”, but such were not the facts before her.

[124] At ¶ 81-82, Kraft J. found that while the wife had taken some steps to find some employment, she had not developed any significant job skills. Her training was dated. Given the length of the marriage and the roles assumed in it, she would “… require a reasonable amount of time to formulate and implement a plan to achieve greater financial independence”. In this regard, Kraft J.’s analysis aligns with ¶ 14(5.) of Politis v. Politis (ie. the need to achieve economic self-sufficiency is often of less significance at the interim motion stage). I also note Kraft J.’s comments about the wife requiring more time were made in the context of a motion that was argued 1 year and 7 months after the date of the parties’ separation.

[125] The husband in this case before me may pursue an imputing argument at trial if he wishes. However, I am dismissing his request to impute an income to the wife on this motion because:

(a) This was a long-term marriage of 27 years, and a total period of cohabitation of 29 years;

(b) The wife’s entitlement to support is strong. It is both compensatory and needs’ based;

(c) There was a division of labour within the relationship. The wife mostly remained in the home and tended to the family;

(d) The wife has been out of the workforce for 20 years, with the exception of an 8-month period between 2008 and 2009. She has not worked at all since 2009;

(e) Meanwhile, the husband first worked in sales and then was able to establish a successful business during the marriage. He was the primary income earner;

(f) The last time the wife worked was when she was a flight attendant, over 12 years ago. The wife would likely require updated training, were she to return to work as a flight attendant.

[126] The husband’s counsel conceded that the husband is not even really arguing that the wife should return to work as a flight attendant, rendering her previous work experience even less relevant. He wants her to go work in a grocery store or in retail and he is critical of her for not having looked for work in the past year and a half since the separation.

[127] I find very little merit to these arguments. In addition to what I have just said above, I note that the separation happened in the middle of the Covid-19 pandemic. The wife’s work past experience is as a flight attendant, but the separation came at a time when the Canadian government and airlines were suspending travel, reducing routes and laying off airline staff. The husband’s argument that the wife should instead go work in retail (or a grocery store) also ignores that there have been repeated and prolonged retail closures over the last year. Some persons have found it unsafe to be outside the home and unsafe to work in grocery stores. Some have turned to government support, like CERB, instead. The husband himself collected some CERB in 2020.

[128] Even if the wife wanted to return to work as a flight attendant and had the necessary training to do so despite the 12 year hiatus, I have no hesitation in concluding that a flight attendant job would not have been available to her as of August, 2020. Nor in the circumstances of this case, would the Court expect the wife to go get a job in retail or in grocery store, immediately on separation and in the midst of Covid-19.

[129] Moreover, I find the circumstances of the breakdown of this relationship to be relevant to the husband’s imputing argument. The wife says the manner in which the husband terminated the marriage (ie. abruptly, followed by a lawyer’s letter the next day, and then he started a new relationship and did not address his support obligations) has been emotionally draining on her. She has needed time to process the life changes that she has experienced. I accept her perspective on this.

[130] The wife says she suffers from debilitating migraines. The husband argues that she has led no medical evidence to this effect. I agree with him that she has not produced medical evidence. But my decision not to impute an income to the wife does not depend on the existence of the migraines, or the lack thereof. Even in the absence of migraines, I would still not change my conclusion not to impute.

[131] There is no evidence before me that the wife has marketable skills yet. Like Kraft J. found in the case before her, the wife needs time to formulate a plan and to implement it.

E. Child Support

[132] The father challenges Jordyn’s entitlement to child support. Subject to a ruling about that, the parties generally agree that the father will pay table child support for the children for the months they were living at home, or perhaps according to the summer formula.

(1) Jordyn’s Entitlement to Child Support

[133] Sections 15.1(1) and (2) of the Divorce Act provide the authority for this Court to make an order for child support for “children of the marriage”. Pursuant to section 2(1) of the Divorce Act, “child of the marriage” means a child of two spouses or former spouses who, at the material time, (a) is under the age of majority and who has not withdrawn from their charge, or (b) is the age of majority or over and under their charge but unable, by reason of illness, disability or other cause, to withdraw from their charge or to obtain the necessaries of life.

[134] At ¶ 32 of Meyer v. Content, 2014 ONSC 6001, Chappel J. summarized the law about whether a child over the age of majority enrolled in post-secondary studies is entitled to support. She wrote that the Court must be satisfied that the child’s education plan is reasonable taking into account the child’s abilities, the plans and expectations of the parents, and the needs and means of the child and the parents.

[135] Chappel J. also lists a number of factors that the Court may consider in determining whether there is entitlement. The parents in this case before me did not place evidence before the Court about all of the factors that Chappel J. lists. For example, there is no evidence about Jordyn’s school performance, no evidence about her savings and no evidence about her future employment plans.

[136] The evidence does reveal that Jordyn graduated high school in June 2015. She started a university program in September, 2015, but withdrew from university the following year when she did not like the program. Between October 2016 and September 2017, Jordyn was not in school.

[137] For the September 2017 to April 2018 school year, Jordyn enrolled in the Arts Fundamental Certificate Program at Sheridan College in Oakville. Beginning in September 2018, she began the Bachelor of Illustration Program there. The 2021-2022 school year will be her final year. Jordyn remained living in the matrimonial home through this time, until this 2021-2022 school year. She is now living in Oakville as she pursues her final year.

[138] The father’s challenge to Jordyn’s entitlement to child support appears to be based heavily on the fact she is now 24, and the fact that she took the extra year or two prior to beginning her current four-year degree. But there is nothing in the Divorce Act or the Federal Child Support Guidelines that sets a cut off age of 24 for child support.

[139] When Jordyn withdrew from school for just under a year between 2016 and 2017, she was only 19. The family was still intact. When Jordyn returned to school in the fall of 2017, she was only 20. There is no evidence in the record before me that the parents, then also still together, were not supportive of Jordyn returning to school or that they were not prepared to support her. To the contrary, the evidence is that RESPs have been used to fund the post-secondary education. And the one-year certificate program that she pursued upon her return to school was in the same field as the four-year degree program she is now pursuing. It appears to me that it was preparatory in nature.

[140] If the father’s actual objection to paying child support for Jordyn is because she is 24, or because she has now taken the extra year at Sheridan before starting the four-year degree and he should only have to pay support for a four year university degree, I would note the inconsistency in his position. He also wants the Court to find Jordyn was not entitled to child support in August 2020 either. At that time, she was only 23, and she was entering her third year of the four year degree (which combined with the one year fundamentals course, would have been her fourth year at Sheridan).

[141] In my view, Jordyn has been entitled to child support throughout this period, and certainly back to August 2020, the date of the wife’s claim. Based on the residential arrangements, there shall be table child support paid to the wife for Jordyn for the 13 months between August 2020 and August 2021, and then the summer formula shall apply commencing September 2021 when Jordyn moved away for school.

(2) Child Support for Tyler

[142] Tyler completed high school in June 2020. In September 2020, she commenced her first year at the University of Guelph, majoring in Psychology. She is now in her second year. Tyler lived in residence at Guelph during the 2020-2021 school year. She returned to the matrimonial home after her last exam in the spring of 2021. She is once again living in Guelph during this 2021-2022 school year.

[143] Based on those residential arrangements, there shall be an order for table child support for Tyler for the month of August 2020, and then child support for her using the summer formula, commencing September 2020.

(3) Child Support for Tanner

[144] Tanner is in the midst of his gap year. He is working part-time at Walmart earning $15.00 per hour. Although he has remained living with his mother and according to her he will be returning to school next fall, the wife has chosen not to seek support for him as of September 2021, at least until next year. There shall be an order for table child support for Tanner for the 13-month period between August 2020 to August 2021.

F. Spousal Support

[145] The parties disagree whether spousal support should be ordered at the mid or the high-range of the SSAGs. At ¶ 77 of Liddell-MacInnis v. MacInnis, Kraft J. found that there was ample evidence that the wife was entitled to spousal support, on both needs’ and compensatory grounds. At ¶ 84, she concluded that support between the mid and high ranges was appropriate, having regard to the length of the marriage, the high costs of the children, the wife’s sole care-giving role and her limited relevant education and job skills. Other than her reference to the “high costs of the children”, the same factors are present in this case before me.

[146] In K.A.F. v. J.L.F., 2017 ONSC 4279, Audet J. ordered temporary support at the high range. She did so because entitlement was both compensatory and needs’ based, because the wife’s housing costs exceeded the husband’s, and based on the fact that the wife continued to provide financial assistance to a child, even though he had technically withdrawn from parental control. She also did so to address the difference in the parties’ net disposable incomes.

[147] In this case before me, the mother intends to find housing for herself and Tanner, but which will also accommodate Jordyn and Tyler when they come home from university. The mother could have argued that Tanner was entitled to child support during his gap year, but she chose not to. Still, the reality is she will incur costs in connection with Tanner’s support. The factors that Audet J. considered are applicable in this case before me too.

[148] I have also considered the factors in section 15.2(4) of the Divorce Act, and the objectives of a spousal support order in section 15.2(6). In addition to what I have just said about the above two cases and their similarities to this case before me, the evidence that I summarized earlier to explain why I would not impute an income to the wife also applies to my decision that there should be spousal support at the high range of the SSAGs. As will be revealed in the DivorceMate calculations (below), depending on the different child support scenarios that apply in certain months, the wife will either have a higher net disposable income than the husband or an equal net disposable income. Both are appropriate in light of the fact that she has and will maintain a household with the children, whereas the husband does not have this responsibility. In the going forward scenario as of September 2021, the parties have equal net disposable incomes.

G. Summary of Child and Spousal Support

[149] I have prepared three additional DivorceMate calculations using the husband’s income of $147,629.00, the husband’s small tax deduction of $277.00 for carrying charges that he took on his personal tax return for 2020, and no income for the wife. The DivorceMate calculations are attached as Schedules “B”, “C” and “D” to this decision.[^7] They provide:

(a) table child support for three children of $2,659.00 and spousal support of $2,939.00 for the month of August, 2020;

(b) table child support for Jordyn and Tanner, plus the summer formula for Tyler, resulting in child support of $2,250.00 per month, and spousal support of $3,290.00 per month, for the 12-month period between September 2020 and August 2021; and

(c) child support for Jordyn & Tyler of $682.00 per month using the summer formula, and spousal support of $4,976.00 per month, commencing September 2021.

[150] The total amount of child and spousal support from August 1, 2020 to October 31, 2021 is $83,394.00. The husband paid $267.00 directly to Tyer in August 2020 and $430.00 per month for child support for Tanner for the 13 months between August 1, 2020 and August 1, 2021. The husband also paid $15,000.00 to the wife pursuant to my Order of August 26, 2021.[^8] The husband shall therefore receive a credit of $33,103.00 for these amounts.

[151] According to the wife’s affidavit of August 23, 2021, the husband paid some other minor amounts prior to August, 2020. As they precede the date back to which the wife seeks child and spousal support, I need not deal with these amounts. However, the husband also gave Tyler cash of $400.00 sometime in August, 2020. The wife disputes that the husband should be given a credit for this cash, since she says she has also given cash to the children from time to time. I do not see the issue of whether the wife has given the children cash to be relevant to the credit the husband should receive. I am prepared to allow this $400.00 credit.

[152] Finally, during argument I was told that the husband may have paid some rent for Jordyn. However, there is no evidence in his affidavits about the amount of the rent he paid, or the time frame that he paid it. The overall tenor of the evidence is that the parties have RESP savings for the children which are covering the cost of post-secondary education at this time. And the evidence is that Jordyn remained living at home with the mother, right up until September 2021.

[153] The only reference to rent is in the father’s initial financial statement of October 7, 2020. There he said he was incurring a monthly expense of rent for Jordyn of $700.00. The expense no longer appears in his updated financial statement sworn October 8, 2021. In the absence of a better explanation from the husband about when he paid the rent, the number of months he paid it, and why he was paying for rent for Jordyn when she lived at home, I would not give the husband a credit for alleged rent payments.

[154] Therefore, after applying the above credits of $33,103.00 and $400.00, the husband owes the wife $49,891.00. This shall be paid from his share of the sale proceeds of the matrimonial home, when the sale closes in November. Commencing November 1, 2021, he shall continue to pay child support of $682.00 per month, and spousal support of $4,976.00 per month, as set out in (c) above.

H. The Wife’s Claim for an Advance on Her Equalization Payment

(1) Applicable Legal Principles

[155] The test for an advance on an equalization payment originates from Zagdanski v. Zagdanski (2001), 2001 CanLII 27981 (ON SC), 55 O.R. (3d) 6 (S.C.J.). It has been applied and refined in a number of cases subsequently. See for example Firestone v. Pfaff, 2012 ONSC 4909 and Stork v. Stork, 2015 ONSC 312.

[156] Whether the Court will order an advance depends on what the ultimate equalization payment will be. The Court should not order an advance that exceeds the ultimate amount. Therefore, there must be considerable certainty about both the right to receive an equalization payment, and also the likely amount of it.

[157] The test also involves the consideration of “need” on the part of the recipient. “Need” is not defined in the sense of poverty, but a reasonable requirement for funds in advance of the final resolution of the equalization issue. That could include the need for funds for use in the litigation.

[158] Finally, the Court will consider fairness. Zagdanski v. Zagdanzki’s initial focus on fairness was vis a vis the person claiming relief. The case law has evolved now to consider fairness to both sides. This assessment might include a consideration of delay, and/or whether there has been or will be prejudice to a party.

(2) Analysis Regarding Entitlement and the Likely Amount of the Equalization Payment

[159] Both parties have filed draft Net Family Property Statements. There is no dispute that the wife will be entitled to an equalization payment. There is a disagreement about the amount.

[160] The wife says she will be entitled to receive an equalization payment of $512,850.00. According to the husband, the wife is only entitled to an equalization payment of $303,434.69. At first blush, the wife’s request for an advance of $250,000.00 is less than the amount of the equalization payment she will receive in either scenario.

[161] Delving more deeply into the issue, I find it important to highlight the differences in their draft Net Family Property Statements in more detail, to satisfy myself that there will not be any material adjustments or refinements to the drafts later on, and that any advance given now will truly not exceed the ultimate equalization payment.

[162] Their respective statements differ in the following ways.

[163] First, the wife’s draft net Family Property statement includes $14,200.00 in vehicles and household contents in her ledger at the date of the separation. She says the husband’s items of this nature were worth $18,500.00. The husband’s Net Family Property statement does not include any amounts for these items, yet he places some values for his contents, on his financial statements.

[164] If the wife’s numbers are correct, then this accounts for $2,100.00 of the equalization payment she will receive (ie. $18,500.00 - $14,200.00 = $4,300.00/2 = $2,150.00). The husband’s draft Net Family Property Statement, by omitting these items, is more conservative. Were the husband to include such numbers on his statement, the equalization payment he would owe to the wife would increase, not decrease.

[165] The wife has included the cash surrender value for the husband’s life insurance of $17,821.00 in the husband’s side of the ledger on her draft Net Family Property Statement. The husband has not included it on his. However, in both his financial statements sworn October 7, 2020 and October 8, 2021, the husband includes this cash value as an asset on the date of separation. Assuming the husband’s draft Net Family Property Statement omitted that asset in error, that means the equalization payment that he calculated he would owe to the wife, will now increase by $8,910.50. It does not decrease his version of the equalization calculation.

[166] The wife’s draft Net Family Property Statement includes as an asset in the husband’s ledger $59,376.00 as amounts owing to him from his corporation at the date of separation. On his draft Net Family Property Statement, the husband acknowledges that some amount will be included as an asset on the date of separation, but he said that he needs to determine it back as at May 20, 2020. That is because the $59,376.00 that the wife uses is the amount as of August 31, 2020, the corporation’s fiscal year end, not May 20, 2020, the date of separation.

[167] The Grunwald & Co. Valuation Report dated August 23, 2021 agrees that the husband will have some amount for this as a personal asset at the date of separation, but like the husband says, the amount as at May 20, 2020 is to be determined. Whatever the amount may be, this will increase the husband’s calculation of the equalization payment that he will owe to the wife.

[168] The wife’s draft Net Family Property Statement includes about $9,500.00 for a car and some jewelry at the date of marriage. The husband disputes that the wife is entitled to a date of marriage deduction for these items. His draft Net Family Property Statement omits them. I did not understand there to be a dispute that these items existed, just that the wife has not proven their values yet. Not every item necessarily requires a valuation. Nevertheless, if the wife proves these date of marriage deductions at trial, then she will get a credit for them in the calculation. But as the husband has already omitted them from his calculation, the equalization payment that he has calculated will not decrease if the wife is unsuccessful.

[169] The most significant disparity in the draft Net Family Property Statements pertains to the value of the husband’s business. The wife’s draft Net Family Property Statement uses Mr. Kwiatkowski’s value for the husband’s business of $760,000.00. The husband uses the Grunwald & Co. number of $435,924.00. This is the principal reason why his calculation of the equalization payment is about $200,000.00 less than the wife’s.

[170] There is another issue, related to net family property, that the Court raised during argument. Unfortunately, neither party obtained a calculation of the costs of disposition on the shares of the husband’s company. While both parties estimated costs of disposition on their RRSPs at 20%, the continent taxes associated with the shares of the company is absent. But then, in his recent financial statement of October 8, 2021, the husband now estimates contingent taxes on the business, also at 20%, or $87,184.80.

[171] Counsel for the wife may be arguing that the husband should not be entitled to any deduction for the taxes on the shares of his business, either because he did not obtain a proper calculation, or because a future disposition of his shares is uncertain. Without commenting on the merits of these arguments, I would prefer to be conservative, and assume there will be taxes.

[172] That leaves the question of how much the taxes will be. The 20% figure that the husband has now placed on his financial statement of October 8, 2021 is arbitrary, and seems to have been selected because both sides put 20% for their RRSPs. The taxes associated with the disposition of shares in a company are calculated differently than the present value of future income taxes that will be paid on RRSPs. This leads to some uncertainty as to the ultimate amount of the equalization payment. But the difficulty here is that the uncertainty arises from the husband’s own failure to obtain a calculation. It is the husband’s onus to prove his deductions from his net family property.

[173] That leaves the Court in a conundrum. Overall, and as I will discuss in more detail below, the evidence militates in favour of awarding the wife some advance, but for the fact that I do not know if 20% is a sufficient deduction for tax. That causes some uncertainty about the ultimate amount of the equalization payment.

[174] One option would be just to accept the husband’s statement that the tax will be 20% based on his financial statement of October 8, 2021. I could say that the husband failed to provide proper evidence and that falls on his shoulders. Yet that may in the end not be fair to him, even though he placed this value on his sworn financial statement himself. I also recognize that the time has not yet come for the Court to determine equalization and so there is more time for the husband to do this.

[175] The second option would be to deny the advance to the wife. That would not be fair to her, since the husband’s actions have caused the uncertainty, and in light of the other evidence that I will come to.

[176] The third option is to be even more conservative in estimating the tax. That is the option I will select. Even if I were to use the husband’s more conservative draft Net Family Property Statement and then apply a generous 40% for taxes on the value of the husband’s business, there is still an equalization payment owing to the wife, albeit it drops to $216,249.89.[^9] On this basis, I therefore find with sufficient certainty that the equalization payment will be at least $200,000.00.

(3) Analysis Regarding “Need”

[177] In regards to the “need” aspect of the test, I accept that the wife borrowed over $25,000.00 from friends and family, at a time when the husband was paying inadequate support, and that she must now pay it back. She owes almost $40,000.00 for the income and valuation reports. She also has an account receivable with her lawyer for $24,166.00 as of October 1, 2021.

[178] I am persuaded by the fact that it was the husband’s onus to prove his income and the value of his business. Instead, at the outset of this litigation he took the unreasonable position that his income was restricted to his Line 150 income for 2019, some $80,000.00 less than the position his counsel later took on this motion. I am persuaded by the fact that the wife made numerous requests to obtain valuations jointly, but the husband refused. This led the wife to incur almost $40,000.00 in valuator’s fees, only for the husband to go out and retain his own valuators after the wife embarked on that path. While I accept that the husband provided disclosure, I am also persuaded that it has come in stages, causing Mr. Kwiatkowski to have to prepare multiple reports. That would have undoubtedly increased the wife’s professional fees with him.

[179] I also accept that the wife needs additional funds to find housing for herself and the children; for Tanner currently; and for Jordyn and Tyler when they come home from university. The wife’s share of the proceeds of sale of the matrimonial home is anticipated to be about $610,000.00. After payment of the liabilities of about $90,000.00 referred to above, she will have approximately $520,000.00 remaining. She anticipates that she needs between $600,000.00 and $700,000.00 for a new residence after the matrimonial home closes. Even with the retroactive support I am ordering, there will still be a shortfall. She will also need funds for the next steps in the litigation.

(4) The Husband’s “Double Dipping” Argument

[180] Before concluding, I wish to briefly address the husband’s “double dipping” argument. The husband argued that there may be a “double dipping” problem in this case, and that may be a reason either not to attribute any of the company’s pre-tax corporate income to the husband as income for support (even though his own valuator would do so), or perhaps it is a reason why the Court should not order an advance on the equalization payment at this time.

[181] As I understood the argument, counsel said double dipping arises because the husband’s business’ value includes retained earnings. If the Court’s income determination for the husband also includes some attribution of the corporation’s pre-tax income, and the Court then orders spousal support based on that income, then the wife may get the same funds twice, as property and support. During submissions, counsel argued by analogy to the case law concerning a pension that is equalized, that then goes into pay and produces an income stream. See for example Boston v. Boston, 2001 SCC 43.

[182] By contrast, counsel for the wife argued that the company’s retained earnings accumulated over several years. The corporation’s pre-tax income being attributed to the husband for 2020 is only a fraction of the pre-tax income for 2020, not the cumulative retained earnings. Counsel also argues that the method of valuation for this company, as a going concern, is different than the method for the valuation of a pension, and while the valuators considered retained earnings, they do not form the value per se.

[183] These issues need to be sorted out at trial. I am not persuaded that there is a “double dipping” problem, at least not yet. The Court is not determining, either final spousal support, or the equalization payment at this time. Regarding property, the Court has only been asked to consider, whether by giving the wife an advance, the husband will be prejudiced should the equalization payment he owes turn out to be less. Regarding spousal support, the Court determined the husband’s income for temporary support based on the record before it. That figure did include some attribution of the corporation’s pre-tax income for 2020. But it did not include any unreported cash. Even if including some corporate pre-tax income later gives rise to a double dipping issue because the 2020 pre-tax income is part of the retained earnings and the retained earnings are part of the company’s value, the husband’s 2020 income may still found to be higher at trial, if the allegations of unreported cash if proven.

[184] As these arguments are currently framed, for the Court to actually determine if there is double dipping, the Court would first have to make a finding of the company’s value. That will happen at trial. In so doing, the Court would have to consider the valuation method and whether it even includes the retained earnings. That may happen at trial. The Court would then have to consider how the retained earnings also formed part of the husband’s income for support. That may happen at trial. Arguments about double dipping may differently apply about child support and spousal support. That may be raised at trial. And the Court would have to consider whether that is even a problem going forward in the years after 2020, since the husband as a self-employed payor, operates a business that will earn income on future sales.

[185] Whether there is any double dipping is a question that the husband should first put to his valuator and then he may pursue it at trial. If it turns out that double dipping is an issue in this case, it is open to the trial judge to adjust the spousal support, either retroactively or for the future. Any overpayments of support, should these turn out to have been made, can be credited to the husband.

[186] For those reasons, I find the wife is entitled to an advance of $200,000.00 towards her equalization payment.

PART V: ORDERS

[187] Based on the foregoing, I make the following Orders:

(a) From the husband’s share of the net proceeds of sale of the matrimonial home, which closes in November, 2021, the wife shall receive the sum of $49,891.00, representing the child and spousal support arrears owing that I have calculated in this decision;

(b) Upon the wife receiving those funds, the parties shall immediately refile their tax returns for 2020. The husband shall deduct spousal support of $16,099.00[^10] in 2020 and the wife shall include $16,099.00 in 2020. The taxes are to be refiled before the end of this calendar year;

(c) Spousal support paid for 2021 and in future years shall be deducted from or included in the parties’ incomes in their future tax filings, pursuant to the Income Tax Act;

(d) Commencing November 1, 2021, the husband shall pay to the wife temporary child support for the parties’ two children, Jordyn and Tyler, in the amount of $682.00 per month. This is the “summer formula” based on the husband’s income of $147,629.00;

(e) Commencing November 1, 2021, the husband shall pay to the wife temporary spousal support in the amount of $4,976.00 per month;

(f) The child and spousal support arrears, and the periodic child and spousal support being ordered in this decision are subject to adjustment by the trial judge, should the trial judge conclude that the husband’s income back to 2020 ought to have been different, or that income should be imputed to the wife;

(g) From the husband’s share of the net sale proceeds of the matrimonial home, the wife shall receive an advance of $200,000.00 towards her equalization payment. This shall be released to her when the sale of the matrimonial home closes in November, 2021;

(h) I encourage the parties to settle costs. If they cannot, costs shall be heard in writing. The wife may serve and file her written costs submissions, limited to 5 pages plus a Bill of Costs, any Offers to Settle, and any references to legislation, rules and case law, by November 12, 2021. The husband may respond, with the same restrictions on his costs material, by November 26, 2021;

(i) The parties have a settlement conference booked with Fryer J. for February 11, 2022. However, given my familiarity with the considerable amount of evidence now filed, including the several reports from the parties’ business valuators, that conference before Fryer J. shall be vacated and the settlement conference shall instead proceed before me. The new date for the Settlement Conference shall be Friday, February 25, 2022 @ 2 PM – for 2 hours. If counsel are not available on that date, I may be contacted through the judicial assistant Karen Hamilton, or through the trial coordinator’s office, and I will accommodate another time for the conference to proceed. I am prepared to give the parties an entire afternoon for settlement discussions;

(j) Unless there is an objection, the parties should have their valuators present for the settlement conference. If there is an issue with having the valuators present, I ask counsel to contact the Court and arrange a time to discuss the issue with me in advance of the conference; and

(k) Unless the parties are able to agree on the costs of disposition for the shares in the husband’s business, I strongly recommend that the parties have their valuators look at this and prepare calculations in advance of the conference. They should also consider whether they need similar calculations done respecting their retirement savings.

[188] Finally, I wish to thank counsel for their helpful facta and their submissions.

Justice Alex Finlayson

Released: October 27, 2021

COURT FILE NO.: FC-20-1016

DATE: 20211027

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Kelli Lynn Swan Gannon

Applicant

– and –

Joseph Albert Gannon

Respondent

REASONS FOR DECISION

Justice Alex Finlayson

Released: October 27, 2021

[^1] Apparently, these preliminary reports were used for the case conference, but they were not placed before me for these motions.

[^2] Again, some reference was made to the fact that Mr. Kwiatkowski prepared some preliminary calculations for the case conference on July 2, 2021. See again FN #1. I was not told about or shown their contents and they are not being relied upon at this motion.

[^3] Justice Murray did the same at a summary judgment motion in Children’s Aid Society of Toronto v. R. (M.), 2016 CarswellOnt 5931 (C.J.), a case decided prior to the enactment of rule 20.2(15).

[^4] Evidence that is credible and trustworthy may be admitted at such motions pursuant to section 94(10) of the Child, Youth and Family Services Act, 2017.

[^5] This reflected in Schedule 5 to the Grunwald & Co. Report – ie. its summary of the husband’s personal tax return for 2020.

[^6] If the parties or counsel are of the view that there are any input errors in my calculations, they may draw those to my attention when they address costs. This is not an invitation to reargue any of the Court’s conclusions about the items that are to form part of the calculations.

[^7] If the parties or counsel are of the view that there are any input errors in my calculations, or mathematical errors respecting the total support the husband owes less the credits, they may draw these to my attention when they address costs. This is not an invitation to reargue any of the Court’s conclusions about the items that form part of the calculations or the credits.

[^8] This matter first came before me on August 26, 2021. The motion did not proceed for certain reasons, which I set out in my Endorsement of that date and which I need not repeat here. I made an order that the husband pay the wife $15,000.00 as a term of the adjournment, to be credited to him in the main decision after argument of the motion.

[^9] 40% applied to the husband’s business value of $435,924.00 is $174,379.60. The husband’s draft Net Family Property Statement currently says that an equalization payment of $303,434.69 is owing to the wife. If I deduct 50% of those taxes from the EP of $303,434.69, the new number becomes $216,249.89 (ie. the taxes of $174,379.60 divided by 2 are $87,184.80. $303,434.69 - $87,184.80 = $216,249.89).

[^10] For complete clarity, this is spousal support of $2,939.00 for the month of August 2020, and spousal support of $3,290.00 for the four months of September 2020 to December 2020.