Court File and Parties
COURT FILE NO.: FS-19-00042547-0000
DATE: 2022-08-05
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Janet Elizabeth McConkey, Applicant
AND:
Sean Gordon McConkey, Respondent
BEFORE: Kurz J.
COUNSEL: Belinda Rossi, Hannah Rich, for the Applicant
Sean Gordon McConkey, Self Represented
HEARD: March 28, 2022
ENDORSEMENT
[1] I heard this interim support motion on March 28, 2022 and released a preliminary decision on April 4, 2022. In it, I determined most of the issues raised in the motion but requested further submissions from the parties as to quantum, based on the findings and figures in that endorsement. The parties were to serve and file those supplemental submissions with fourteen days (seven for the Applicant wife and another seven for the Respondent husband).
[2] I have now learned that those submissions were exchanged and filed on time. But they did not come to my attention until the issue was raised in a motion last week before my sister judge, Justice Mills. I finally received those submissions on July 29, 2022 and have now reviewed them. I offer both parties my apologies for the delay. I hope, with the expeditiousness of these reasons following my personal receipt of their submissions, to make up for the delay in some small part.
[3] Each party’s submissions seek to re-argue some aspect of my April 4, 2022 decision. With one exception, I am unwilling to entertain such submissions. The one exception is my mathematical error in calculating the husband’s income for 2021: both parties agree that it should have been calculated as $232,107, based on the figures that I relied upon. My order for 2021 is therefore based on that $232,107 figure.
[4] In reviewing my earlier endorsement, I see that there is some ambiguity about the starting date of the interim support that I am ordering. My reference to support commencing on April 1, 2021 at para. 3 of my April 4, 2022 endorsement was a typographical error. As I stated at para. 35 and 37 of that endorsement, it is my intention that both child and spousal temporary support commence on January 1, 2021.
[5] I also note that in these reasons, I refer to the husband’s retrospective support obligations as arrears rather than retroactive support. That is because the wife gave the husband notice of her claim to support when her application was issued in 2019, which is the presumptive date for the commencement of her spousal support entitlement: Kerr v. Baranow, [2011] SCC 10. That notice came just months after the parties separated. There is no question here that the children have been entitled to child support since separation: Michel v Graydon, 2020, 45 R.F.L. (8th) 1 (S.C.C.), D.B.S. v. S.R.G. (2006), 31 R.F.L. (6th) (S.C.C.).
[6] The parties agree that child support should not be paid for Carolyn for 2021 and 2022. She was living on her own from August 2019 onward and paid her own university expenses.
[7] The other two children, Charlotte and Hollis, were enrolled in university in 2021 and 2022. Charlotte attended Dalhousie University and returned to the home of the wife over school breaks and holidays (with the wife supplying the airfare). Hollis resided with the wife while attending OCADU. Both children directly paid their university expenses through loans and financing. The husband had the means to contribute to those expenses, and argues that he made some direct payments to the children. Nonetheless, the husband failed to pay full support for the children including s. 7 expenses. That resulted in the children incurring debt that arguably, they should not have incurred. That is an issue which may be addressed at trial.
[8] With regard to the formula to be used for Charlotte’s child support, the mother seeks full table support, even though Charlotte resided in Halifax for the school year. On the other hand, the husband seeks to have his child support based on the Divorcemate reduced “summer formula”. The wife argues that she maintained a home base for Charlotte and that her basic expenses were hardly reduced by Charlotte’s school-year residence in Halifax. She argues that in the alternative, I should calculate support based on the mid-point between the table amount and the summer formula. Again, the husband points to his direct payments to Charlotte.
[9] The issue of which formula best applies in the circumstances is a matter of discretion. I do not find that the payment of full table support when Charlotte was spending most of the school year in Halifax is a reasonable way to calculate support. But the wife was carrying a larger than necessary burden of support for Charlotte and assisting her in flying home during holidays. She was, as she argues, maintaining a home base for the child, whose expenses, other than groceries, were not significantly diminished by the child’s time in Halifax. Thus, I order that table amount for Charlotte be fixed at halfway between full table and the summer formula.
[10] The wife points out that the husband has made a total of $48,700 in unclassified support payments to her in 2021 ($36,070) and 2022 ($12,630, as of March 31, 2022). Since there was no order or agreement regarding those payments, there is no tax consequence. As I stated in my earlier endorsement, the husband will receive credit for those amounts, first against child support, and if any remains, as against spousal support. I also note that as a result of the delay in the release of these reasons, explained above, I have not given credit for any payments made from April 1, 2022 onward. I assume that the parties can make the appropriate adjustments based on these reasons. If they are unable to do so, they may arrange a further Zoom attendance before me.
[11] Based on these figures, the husband should have paid table support of $3,062 per month in 2021, for a total of $36,744. For 2022, he should have paid and shall continue to pay, until further order, $3,174/mo. As of August 1, 2022, he should have paid $25,392. Thus, in total, he should have paid $62,136 for the period between January 1, 2021 to August 1, 2022, inclusive. I am unaware of the actual amount that he did pay in 2022.
[12] Regarding spousal support, the Applicant’s request is that she receive an amount that is outside the high end of the SSAG range. She seeks 70% of the parties’ NDI. She states that she was required to encroach on over $300,000 in capital while the husband was underpaying support. She argues that her “need, compounded by the erosion of her capital, cannot be adequately addressed by movement within the SSAG ranges”. In the alternative, she seeks support in the high end of the range.
[13] Based on my decision on table child support, she is seeking monthly payments within the following range:
Year Low Mid High 70% NDI
2021 $4,610 $5,169 $5,744 $9,162
2022 $4,634 $5,225 $5,833 $9,459
[14] In seeking 70% NDI or the high end of the SSAG range, the wife asks me to consider a number of factors:
a. The parties’ long-term marriage and the roles that each party played during that marriage;
b. Their radically different standards of living, post-separation;
c. The husband‘s delay in responding to this application;
d. His “frustration” of her attempts to obtain court dates;
e. His failure to make fulsome and timely financial disclosure;
f. The wife’s need to encroach on capital and enter into debt because of a lack of proper spousal support;
g. The wife informed the husband of her dire financial circumstances, particularly when she was laid off of a retail job because of Covid. Yet he refused to make any adjustments in payment;
h. On the other hand, the husband’s capital position increased to the extent that in 2020, he made a $100,000 RRSP contribution and received a $28,792 CRA refund;
i. Since 2019, the disparity in NDI’s between the two households (where the husband’s wife makes a significant six-figure income and she had been caring for both children on minimal income and support as set out above and in my previous endorsement) is apx. 90%/10%;
j. She has medical needs yet is no longer covered by medical benefits, while the husband, who has such coverage, did not place her on his plan (it is unclear whether she is eligible under his current plan);
k. In sum, she has suffered great financial disadvantage since the parties separated.
[15] The husband does not directly respond to these arguments. Instead, he seeks an order that he both pay at the low end of the SSAG range and that the quantum be set at only $2,550 per month, tax free. In support of the low range, he speaks to his cash flow issues, his partner’s financial obligations and the extent to which he shares expenses with that partner.
[16] In support of the request that his spousal support be paid tax free, he states that his approach “while not tax advantageous, maintains a reasonable cash flow to both the Respondent and the Applicant. The net of tax approach outlined in the table below equates to a gross of tax figure close to the mid SSAG amount of $5,350”.
[17] With respect, those arguments make little financial sense for the parties, even if the court were inclined to order spousal support of $5,350 per month. For ex-spouses with the income disparity of the parties here, the Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.) allows a win-win scenario: the high-income earning payor-spouse benefits from a generous tax deduction (over 50% in Manitoba, at the highest tax level). The support-recipient, while required to treat the support payments as income, starts at a far lower tax bracket than the payor. That means that she pays less than the maximum tax on her support income and is able to net far more than if the payments were tax free, as in the husband’s scenario. This is illustrated by the SSAG calculations offered by the wife. For example in the 2022 scenario with an income of $241,400 for the husband and $25,259 for the wife:
Low range support is $4,634 per month. But the after-tax cost to the husband is $2,296/mo., while the after-tax benefit to the wife is $3,258 per month.
Mid-range support is $5,225 per month. But the after-tax cost to the husband is $2,601/mo., while the after-tax benefit to the wife is $3,666 per month.
High-range support is $5,833 per month. But the after-tax cost to the husband is $2,915/mo., while the after-tax benefit to the wife is $4,077 per month.
[18] I note as well my understanding that the deduction/inclusion provisions of the Income Tax Act are mandatory in the face of a spousal support order.
[19] For the following reasons, I order that spousal support be paid at the high end of the SSAG range:
a. The parties had a long-term marriage.
b. The wife suffered great financial disadvantage following separation. She assumed a secondary earning role during the marriage, allowing the husband to advance his career. Her post-separation work only paid her an amount that floated near the minimum wage level.
c. On the other hand, the husband had a substantial career with portable and well-paying skills.
d. Following the separation, the husband’s failure to pay proper support was blameworthy conduct which added to the wife’s disadvantage. So too was his failure to provide full disclosure, despite the wife’s requests. In the absence of a court order or binding agreement, the husband simply chose to pay whatever support he saw fit, in whatever manner he chose, even though it was manifestly below his support obligations for both their children and the wife. He now blames her for choosing to litigate.
e. The wife’s health and lack of extended-health insurance coverage add to her post-separation disadvantage;
f. There is no juridical reason that the wife should have suffered such a diminution of her standard of living while the husband continued to enjoy a far higher standard of living.
[20] Nonetheless, I am not prepared at this stage and on the materials before me to order more than the high end of the support range. I leave that argument to trial.
[21] That means that, as of today, the husband owes the wife arrears of spousal support of $68,928 for 2021 and $46,664 for the period between January – August 2022. Unless I am mistaken, his voluntary payments to date do not exceed his child support obligations, Thus, in total, he owes her spousal support of $115,592. He shall pay her ongoing spousal support of $5,833 per month.
[22] Accordingly. I order that:
a. Commencing September 1, 2022 and continuing of the first day of each month thereafter until further order, the husband shall pay, on a temporary basis, table child support of $3,174/mo. plus spousal support of $5,833 per month.
b. The husband shall pay to the wife arrears of child support for the period between January 1, 2021 and August 1, 2022, inclusive, of $62,136. From that amount shall be deducted $48,700 already paid as of the date that the parties last appeared before me. In addition, the husband is entitled to credit for any table child support payments made to the wife from April 1, 2022 onward. If the parties cannot agree on that figure, they may arrange to appear before me to determine that amount.
c. The Husband shall pay to the wife arrears of spousal support of $115,592 for the period between January 1, 2021 and August 1, 2022, inclusive.
d. If the parties are unable to agree on the exact calculation of the amount of child and spousal support that the husband owes to the wife, based on the figures above, they may arrange to appear before me. However, unless I change them, the figures set out above, and in particular the arrears of spousal support will be binding.
[23] The parties should attempt to resolve the issue of costs on their own. If they are unable to do so, the Applicant may submit her costs submissions of up to three pages, double spaced, one-inch margins, plus a bill of costs/costs outline and offers to settle. The Applicant shall do so within 14 days of release of this endorsement. She need not include the authorities upon which she relies so long as they are found in the commonly referenced reporting services (i.e., LexisNexis Quicklaw, or WestlawNext) and the relevant paragraph references are included. The Respondent may respond in kind within a further 14 days. No reply submission will be accepted unless I request it. If I have not received any submissions within the time frames set out above, I will assume that the parties have resolved the issue and will make no costs order.
“Marvin Kurz J.”
Electronic signature of Justice Marvin Kurz
Date: August 5, 2022