COURT FILE NO.: FC 1194/97-01
DATE: 2023/02/09
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Peter Belton Moffat
Norman A. Pizzale, for the Applicant
Applicant
- and -
Linda Jane Moffat
William J. Doran, for the Respondent
Respondent
HEARD: October 24, 25, 26, 27, 28, 2022
MITROW J.
OVERVIEW
[1] This trial involved a proceeding that was commenced by the applicant, Peter Belton Moffat (“Mr. Moffat”), in September 2019.
[2] Mr. Moffat sought an order terminating his spousal support obligation, on a go-forward basis, and also retroactive to January 1, 2018.
[3] The respondent, Linda Jane Moffat (“Ms. Moffat”), resisted Mr. Moffat’s request to terminate his spousal support obligation. She also sought payment of spousal support arrears in the amount of $35,000 (said amount having been referred to in a separation agreement and previous court order) and further, at trial, Ms. Moffat sought payment of significant additional arrears of spousal support.
[4] Also, Mr. Moffat had brought a motion for contempt, for Ms. Moffat’s alleged failure to comply with an order for financial disclosure. At the time of trial, that motion had not been dealt with and was outstanding, and accordingly, the contempt issue was dealt with at trial.
[5] During the course of the trial, the parties signed, and filed, partial final minutes of settlement agreeing to terminate on-going spousal support payments by Mr. Moffat, and a final order was made during the trial in accordance with the minutes of settlement.
[6] The trial continued on all other issues.
[7] For reasons that follow, Ms. Moffat’s claims for spousal support arears of $35,000, and spousal support arrears from January 1, 2018, as detailed in the order below, are allowed, and all other remaining claims of both parties are dismissed except as provided in the order.
BRIEF BACKGROUND FACTS
[8] The parties were married to each other in 1965 and separated in 1995. They were divorced pursuant to a divorce order dated May 23, 2000. Only a divorce was granted; the divorce order contained no orders for corollary relief or otherwise.
[9] At the time of trial, both parties were 79 years of age.
[10] The parties were in their early 20s when they were married. At that time, Ms. Moffat was a registered nurse and Mr. Moffat was attending law school.
[11] Ms. Moffat continued to work for a year so following the marriage. She became pregnant with their eldest daughter, and thereafter did not return to the workforce.
[12] The parties had a second child, a daughter born 1969, but tragically she died in 2006.
[13] Initially Mr. Moffat practiced law briefly, but since then he has been a licensed real estate. Mr. Moffat’s expertise is in the area of commercial real estate. His work has included finding building sites for clients who are developers.
[14] It was Ms. Moffat’s evidence that during the marriage she was a stay-at-home parent and cared for the children, while Mr. Moffat worked outside the home and was the income earner.
[15] Ms. Moffat described a comfortable lifestyle during the marriage with frequent vacations and also overseas travel. She explained that Mr. Moffat handled the finances and would provide her with funds.
[16] I accept Ms. Moffat’s evidence as to the roles of the parties during the marriage and their lifestyle. That evidence was not seriously disputed by Mr. Moffat, if at all.
[17] At separation, it is apparent that Ms. Moffat’s entitlement to spousal support was both needs-based and compensatory.
PRIOR AGREEMENTS AND LITIGATION
[18] The past history of agreements, and the court order, are important considerations. They provide context and assist in the proper disposition of this proceeding.
[19] In relation to the prior agreements and litigation, discussed below, the evidence disclosed that throughout each party was represented by senior and experienced family law counsel.
i) The Separation Agreement
[20] On November 17, 1999, the parties executed a comprehensive separation agreement (“the separation agreement” or “agreement”) dealing with all their outstanding issues, which were property and spousal support. At the time of the agreement, both children were adults and there were no parenting or child support issues. The agreement, although dated November 9, 1998, was not signed until a year later because of various delays. The reasons for the delays are not germane to the disposition of this case.
[21] The agreement contains some unique provisions in relation to property and spousal support issues.
[22] In relation to property, the agreement included the following:
(a) Mr. Moffat’s net family property statement is attached as a schedule to the agreement. His assets on the valuation date are shown to include a deficit of a little over $1 million in relation to one of his business interests. This in turn, produced a negative net family property which was deemed to be zero. As a result, Ms. Moffat is shown as owing an equalization payment of approximately $175,000;
(b) The agreement acknowledges that Ms. Moffat disagrees with Mr. Moffat’s negative net family property, and that the equalization payment issue would involve a “lengthy and expensive” trial examining Mr. Moffat’s various corporations, both in Canada and the United States, including inter-company financial relationships and the values of the companies, all of which “would be very complex, expensive, and time consuming” (para. 4 (c));
(c) The agreement acknowledges that the matrimonial home, which was registered solely in Ms. Moffat’s name, was Ms. Moffat’s significant asset and had a value of $325,000 on the valuation date and that Mr. Moffat would be entitled to an equalization payment of $175,000 (para. 4 (b));
(d) The equalization issue was settled on the basis that Ms. Moffat would retain the matrimonial home free from all claims by Mr. Moffat, and Mr. Moffat released all claims to an equalization payment (paras. 5 (a) and (b)); and
(e) Pursuant to the agreement, Mr. Moffat was required to pay $35,000 to Ms. Moffat at his discretion. This is the lump sum amount that was claimed by Ms. Moffat in this proceeding; payment of this amount is set out in para. 5 (d), of the agreement as follows;
Additionally, Peter agrees to pay Linda $35,000.00 by December 31, 2003, or on a later date, if he is unable to financially afford that payment by December 31, 2003. This sum shall not bear interest and payment of this sum shall be in Peter’s sole discretion.
[23] In relation to spousal support, the agreement included the following:
(a) The agreement takes into account Ms. Moffat’s need for money to support herself, and to continue to live in the matrimonial home (para. 6 (c));
(b) The agreement takes into account Mr. Moffat’s need for certainty and stability and freedom to concentrate his efforts in various commercial ventures, that if successful, will enable him to earn sufficient money to pay spousal support without having to revisit that issue in court constantly (para. 6 (c));
(c) The agreement specifies that Mr. Moffat has agreed to pay a spousal support amount that is beyond his present financial means, and at a time when he is unable to work “in any effective capacity” due to doctor’s orders to take three months to recuperate from open-heart surgery (para. 6 (d));
(d) In relation to the spousal support payment schedule, the agreement states that the payment schedule presupposes Mr. Moffat’s ability to work at full capacity, that Mr. Moffat is concerned about creating an obligation that he may not be able to pay, but that he is “prepared to find the money even though it means borrowing the money to meet these payments in consideration for and in return for Linda agreeing to accept this payment schedule on a full and final basis without the right to seek a variation EVER AGAIN.” (Emphasis in original; para. 6 (d));
(e) In addressing Mr. Moffat’s right to vary spousal support downward, the parties at para. 6(f) express their intention and agreement that Mr. Moffat’s can do so in circumstances, which by way in summary, are related to Mr. Moffat’s health or his retirement;
(f) The formal variation clause for Mr. Moffat is found in para. 11(b) which provides, in part:
Peter shall be entitled to apply for a variation of the support payments downward in the event of a significant deterioration or lack of further recovery of his health that adversely affects his full capacity to work and his ability to make these payments, or in the event of his continued disability in his capacity to work, or in the event of his retirement… [some acknowledgements then follow]
(g) Also included in para. 11(b) is an acknowledgement, which in summary, notes that Mr. Moffat soon will be evaluated following his reconstructive heart summary, that doctors have advised him that his health will not return to full capacity for work purposes for at least one year, if then, and that he may not recover fully;
(h) If a reduction in spousal support is sought by Mr. Moffat, then his “complete financial picture” including income, expenses, assets and liabilities shall be considered in assessing his ability to pay; Mrs. Moffat also must make similar disclosure (para. 11(c)); and
(i) Finally, the agreement prohibits Ms. Moffat from ever seeking an increase in spousal support under any circumstances and limits her spousal support increases to the COLA clause (para. 11(a)).
[24] In relation to quantum of spousal support, the agreement reflects spousal support payments made in 1997 and 1998 up to November 6, 1998. Thereafter the spousal support started at $1000 per week in November 1998, increasing to $1153.84 per week in November 2000 and finally topping out at $1385 per week in November 2002, subject to annual COLA increases pursuant to ss. 34(5) and (6) of the Family Law Act, R.S.O. 1990, c. F.3, commencing November 2003.
[25] The spousal support payment schedule was amended by way of a collateral agreement signed in November 1999 at or about the same time as the separation agreement. The effect of the collateral agreement was to restructure the spousal support payments. Mr. Moffat was required to pay $807.70 per week as a base amount for the period November 1998 to November 2003, but with a specified lump sum top up in November of each year from 1999 to 2003 inclusive.
[26] The effect of the agreement (and the agreement itself summarizes the effect of the payment schedule) is that the payment schedule will increase to a base amount of $72,000 annually (equivalent to $1385 per week) and that amount will continue to be paid yearly thereafter subject to the COLA increases (para. 6(d)).
[27] To further solidify the parties’ intention, the agreement (para. 6(a)) specifically refers to Mr. Moffat’s difficulty of “having a limited ability to pay”, and the agreement sets out Mr. Moffat’s line 150 income for each year from 1992 to 1997. For the years 1993 to 1997 inclusive Mr. Moffat’s income ranged from $68,014 to $78,917. For 1992 his income is reported as negative $40,076.
[28] Mr. Moffat further was obligated under the agreement to maintain the existing health coverage for Ms. Moffat, and as security in the event he would predecease Ms. Moffat, the agreement contained detailed provisions regarding Mr. Moffat’s obligation to keep his life insurance in effect and to maintain a life insurance trust.
[29] Regarding the court application that was ongoing at the time that the separation agreement was signed, the agreement provided for an interim order to be set aside and Mr. Moffat was to proceed to obtain a divorce. No final court order was made regarding spousal support. Terms of the settlement including the spousal support were contractual only.
[30] The agreement specified that the property and spousal support provisions are “intertwined” and a “package settlement” (para. 12(b), and that the property and spousal support provisions are “inextricably intertwined” and constitute a full and final settlement between the parties (para.19).
ii) Mr. Moffat’s 2003 Application
[31] Notwithstanding the apparent intended finality of the separation agreement, Mr. Moffat issued an application in March 2003, pursuant to the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.), or alternatively the Family Law Act, to determine the spousal support he should pay to Ms. Moffat. Mr. Moffat requested an order rescinding all arrears pursuant to the separation agreement (and the collateral agreement).
[32] Mr. Moffat brought this application on the basis that he could not pay the spousal support because his income expectations had not been met. The primary reason provided was that Mr. Moffat was involved in a failed business venture that he allegedly had been counting on to meet his support obligations when he signed the separation agreement.
[33] Mr. Moffat alleged in his application that he had reduced his weekly spousal support payment in June 2022 to $400 and as a result fell into arrears.
[34] On October 29, 2004, Marshman J. made a consent order (“the Marshman order”) pursuant to minutes of settlement (which were deemed to constitute a domestic contract) that had the effect of concluding the litigation commenced by Mr. Moffat’s application.
[35] The Marshman order was the subject of submissions at trial as to its effect including whether it was final or temporary. The Marshman order on page one indicated that it was a “temporary order.”
[36] I find as follows regarding the Marshman order and its effect:
(a) Mr. Moffat was ordered to pay spousal support in the amount of $1038.49 per week commencing November 5, 2004;
(b) The collection of existing spousal support arrears that had accrued, and arrears which will continue to accrue pursuant to the separation agreement and collateral agreement were suspended until further order of the court. This provision is important because the existing arrears were not rescinded; also not rescinded were the arrears that would continue to accrue because of the “differential” being the difference between $1385 weekly required to be paid pursuant to the separation agreement (plus COLA) and the amount of $1038.49 weekly specified in the Marshman order;
(c) The Marshman order provided that all parties would execute a notice to withdraw the order from enforcement from the Family Responsibility Office;
(d) The $35,000 payment that was “at the discretion” of Mr. Moffat pursuant to para. 5(d) of the separation agreement was ordered to be treated as arrears of support without interest “to be paid as soon as [Mr. Moffat] is in a financial position to make the payment in one payment or in instalments as determined by Court Order or by Agreement of the parties” (para. 5(d), Marshman order);
(e) The significance of this provision is that the $35,000 changed from a discretionary payment into an order, where the only remaining issue was the timing of the payment;
(f) Mr. Moffat’s claims in his application to determine spousal support and to rescind support arrears were dismissed without costs (para. 7). I would view that portion of the order as final;
(g) The order (para. 8) then amends the “variation Application” to request relief under the Family Responsibility and Support Arrears Enforcement Act 1996, S.O. 1996, c. 31, for a determination of Mr. Moffat’s ability to pay sums owing under the separation agreement and the collateral agreement “and any other ancillary relief provided for in the legislation in particular ss. 35(5), 35(6), and 41(9).” The amended application is then adjourned to be brought on for a hearing at the request of either party “after August 31, 2004 or sooner if there is a default under the order.” There appears to be an error in the date of August 31, 2004, as the executed minutes of settlement show the date as August 31, 2005. This error does not affect the disposition of the present case;
(h) All provisions contained in the order are reviewable by either party on the earlier of Mr. Moffat failing to comply with any obligations imposed on him in the order and August 31, 2005 (para. 4).
[37] The overall effect of the Marshman order in relation to the payment of periodic spousal support can be summarized as follows: despite the provisions in the separation agreement as modified by the collateral agreement, Mr. Moffat was ordered to pay spousal support in a reduced amount, as compared to the amount of $1385 per week plus COLA as specified in the separation agreement and collateral agreement; notwithstanding the lower payments in the Marshman order, the existing arrears pursuant to the separation agreement and collateral agreement were preserved; in future, arrears pursuant to the agreements would continue to accrue; and payment of the existing and future arrears was suspended subject to either party’s right to bring the matter back to court.
THE CONSENT ORDER AT TRIAL AND THE NATURE OF THE CURRENT PROCEEDING
[38] Mr. Moffat had initiated the current proceeding via motion to change; this created a procedural issue at trial. The motion to change included the Marshman order, which on its face, as previously noted, is shown to be a temporary order. A motion to change applies only to a final order and an agreement for support filed under s. 35 of the Family Law Act: r. 15(2), Family Law Rules, O. Reg 114/99.
[39] There was no evidence suggesting that the separation agreement and the collateral agreement had been filed pursuant to s. 35 of the Family Law Act.
[40] It is difficult to characterize any portion of the Marshman order as being final, with the exception of para. 7 (dismissing arrears claims and the application) as discussed earlier.
[41] I would note also that the Marshman order did not specify the legislation pursuant to which the order was made.
[42] During the trial there was discussion regarding this procedural issue and the applicable legislation that governed the current proceeding. As a consequence, both counsel assisted in resolving the procedural issues by including in the partial final minutes of settlement a provision deeming Mr. Moffat’s motion to change and the change information form to be an application pursuant to the Divorce Act, and deeming Ms. Moffat’s response to motion to change to be her answer to the deemed application.
[43] On October 25, 2022, during the trial, a final order was made incorporating the procedural issues as set out in the minutes of settlement. In addition, the final order also included the following from the minutes of settlement:
(a) Mr. Moffat’s obligation to pay spousal support terminated on a final basis, including Mr. Moffat’s obligations pursuant to the separation agreement, the Marshman order, and the minutes of settlement in relation to the Marshman order;
(b) Mr. Moffat’s obligation to secure spousal support by life insurance or otherwise was terminated on a final basis;
(c) The termination of Mr. Moffat’s obligations regarding spousal support and life insurance was effective on October 25, 2022; and
(d) The partial final minutes of settlement were without prejudice to either party’s rights and claims regarding the balance of the issues as set out specifically in the minutes of settlement.
[44] Accordingly, this case proceeds as a corollary relief proceeding in relation to spousal support pursuant to section 15.2 of the Divorce Act.
ISSUE 1: MS. MOFFAT’S CLAIM FOR PERIODIC SPOUSAL SUPPORT ARREARS ACCRUING FROM 2003
[45] At trial Ms. Moffat provided calculations for the “differential” in spousal support. As discussed earlier, this differential is based on $1385 per week specified in the separation agreement and $1038.49 per week specified in the Marshman order. The calculation of this differential together with the COLA adjustments was made back to November 2003.
[46] The resulting amounts as calculated by Ms. Moffat were provided during the course of the trial. There were two scenarios: (1) from November 21, 2003 to September 13, 2019 (the latter date being several days prior to the issuance of the motion to change); and (2) the period from November 21, 2003 to October 21, 2022 (the latter date being just prior to the commencement of the trial).
[47] Based on these two time frames, the spousal support arrears as calculated by Ms. Moffat ranged from $285,177 to $340,965, and the COLA adjustments increased those amounts ranging from $28,833 to $34,332.
[48] Mr. Moffat submits that Ms. Moffat’s pleadings do not claim periodic spousal support arrears back to 2003. Mr. Moffat submits that had he been made aware of Ms. Moffat’s intention to make such a claim, then he would have amended his pleadings to include, inter alia, variation of spousal support back to the date of arrears as claimed by Ms. Moffat. Mr. Moffat argues that over the years, neither party sought to review the Marshman order even though the order permitted same. Mr. Moffat submits that Ms. Moffat had accepted payments as set out in the Marshman order. Further, no attempt had been made to enforce the COLA clause.
[49] In her pleadings regarding spousal support, Ms. Moffat claimed relief that included:
(a) Mr. Moffat shall continue paying spousal support in the amount of $1038.49 per week in accordance with the Marshman order, after August 27, 2019. It is noted there is no dispute that Mr. Moffat had ceased paying spousal support on or about August 27, 2019, with the exception of a subsequent 12-month period as detailed later in these reasons; and
(b) Mr. Moffat shall pay spousal support arrears of $35,000 in accordance with the Marshman order.
[50] It is salient that Ms. Moffat advanced no claim for any period of time regarding the differential or the COLA increases. Hence, going into trial, the issues as defined by the pleadings in relation to periodic spousal support related only to the period commencing January 1, 2018 and the extent to which the spousal support payment set out in the Marshman order should continue after January 1, 2018.
[51] Mr. Moffat takes no issue that the claim for lump sum arrears of $35,000 referred to the in the Marshman order was pleaded and properly before the court.
[52] In relation to her claims for the differential and the COLA back to November 2003, Ms. Moffat submits it is sufficient that the facts pleaded by her did set out the history of the separation agreement and the Marshman order, from which it should have been apparent to Mr. Moffat that such a claim was before the court. I disagree.
[53] I accept the statement that failure to plead claims properly is not always fatal to a party’s ability to ask the court to grant relief later in the case or at trial: Norris v. Morocco, 2020 ONSC 4103 (Ont. S.C.J.), at para. 3.
[54] In the present case, Ms. Moffat’s claims for spousal support arrears attributable to the differential and the COLA increases were quite substantial – over $300,000 at the low end of the range. There was nothing in Ms. Moffat’s pleadings to alert Mr. Moffat about this claim; rather Ms. Moffat pleaded that spousal support should continue in the amount set out in the Marshman order.
[55] It was open to Ms. Moffat to have included in the present case a claim for the differential and COLA, as was her right pursuant to the Marshman order. Not having done so however, it would be unjust and unfair to Mr. Moffat to allow those claims now to be advanced during trial.
[56] In Billett v. Billett, 2013 SKQB 269 (Sask. Court of Queen’s Bench) at para. 74, the court disallowed a claim for retroactive spousal support as a result of a failure to plead that claim. In that case, the amounts involved were much more modest than in the case at bar.
[57] I find that Ms. Moffat’s claims for the differential and COLA are not properly before the court, and are dismissed, but on a without prejudice basis to advance those claims later in a separate proceeding as provided in the order below.
[58] Notwithstanding the order below, Ms. Moffat will need to consider carefully whether such a claim should be advanced, having regard to all the circumstances including the substantial amounts involved, the substantial passage of time since the dates of the separation agreement, the collateral agreement and the Marshman order during which no proceeding was brought to enforce the differential or the COLA.
ISSUE 2: WHAT AMOUNT OF SPOUSAL SUPPORT IF ANY SHOULD MR. MOFFAT PAY FOR THE PRIOD COMMENCING JANUARY 1, 2018 to October 25, 2022?
i. Preliminary Issue – Mr. Moffat’s Nondisclosure
[59] Although the analysis below does review each party’s financial and other circumstances, there is also the issue of Mr. Moffat’s nondisclosure in the relation to the existence of a trust.
[60] The issue raised in the evidence and discussed below is to what extent, if any, does Mr. Moffat’s nondisclosure disentitle him to the remaining relief he seeks.
ii. Mr. Moffat’s Financial and Other Circumstances
[61] Mr. Moffat does have a number of medical issues as detailed in a medical report dated April 30, 2022 from his family physician, Dr. Mawji. The report lists various diagnoses that include atrial fibrillation, diminished cardiac function, osteoarthritis, significant lower urinary tract symptoms, cognitive impairment, mood and anxiety disorder, and a neuromuscular disorder. The report adds that Mr. Moffat has “certainly deteriorated over time, and more so over the past two years.”
[62] Dr. Mawji opines that Mr. Moffat’s physical, mental and cognitive state has deteriorated, and that Dr. Mawji cannot envision Mr. Moffat experiencing his usual function and abilities including gainful or productive employment.
[63] During his evidence Mr. Moffat at times had difficulty recalling certain financial details, indicating that he did not want to guess and that he would need to see various records or documents before answering.
[64] Mr. Moffat has been cohabiting with his partner for approximately 15 years. She is about six years younger than Mr. Moffat. She handles the daily finances. Mr. Moffat’s partner works in what appears to be a clerical capacity. She has been with her current employer for 15 to 20 years and typically works four or five hours per day, five days per week. Mr. Moffat’s partner shares the household expenses with Mr. Moffat.
[65] When asked about his partner’s annual income, Mr. Moffat’s somewhat acerbic response was: “never asked.” I would add that that response was not very believable, and quite different from not remembering.
[66] In his most recent financial statement sworn October 5, 2022, Mr. Moffat did include a schedule indicating his spouse earns an estimated $20 per hour and that she contributes 50% towards the household expenses.
[67] Despite the medical report, Mr. Moffat described himself as working 30 to 40 hours weekly. During the last year or so, he has looked at various properties for interested clients. It was Mr. Moffat’s evidence at trial that he had no pending deals. However, as Mr. Moffat explained, he was always looking for properties and opportunities.
[68] During his cross-examination, Mr. Moffat described what a routine day looks like for him. I find that Mr. Moffat, although he uses a cane, is quite independent. He continues to drive.
[69] Also, during his cross-examination Mr. Moffat testified that in 2019, when this case was started, that his memory issues were not as bad. He thought that his memory was “okay”, although maybe a bit slower. Mr. Moffat described, in 2019, that his doctor wanted him to do some tests and that Mr. Moffat thought that was “overkill.”
[70] Mr. Moffat discloses no current employment income. Mr. Moffat’s financial statement filed just prior to trial disclosed an annual income of $36,083. This includes: $8,887 CPP; $7,486 old age security (OAS); and $19,208 from a life income fund (LIF).
[71] Mr. Moffat and his partner live in their jointly-owned residence. Mr. Moffat acquired this residence in 2000, but he transferred it to the joint names of himself and his partner in 2009. Mr. Moffat could not say whether his partner paid him any money on the transfer, but he added that she “earned it.”
[72] Mr. Moffat discloses in his financial statement a net worth of $617,974. However, this was based on a value of $400,00 attributed to the jointly-owned residence. Mr. Moffat acknowledged during his evidence-in-chief that he believed this property had a current value ranging from $550,00 to $600,000 and he agreed that this would result in an increase to his net worth ranging from $75,000 to $100,000.
[73] Although not discussed during the trial and not part of the viva voce evidence, it is noted that Mr. Moffat’s solely-owned corporation (discussed blow) includes in its corporate tax filings a balance sheet as of January 31, 2022 disclosing as a long-term liability the sum of $393,544, “due to related parties.” It would appear most likely that Mr. Moffat would be included in the related parties. His financial statement however discloses no receivable owing from the corporation. I do not consider this amount as an asset available to Mr. Moffat given the lack of evidence or submissions on this point. However, the question does remain as to the accuracy of Mr. Moffat’s financial statement.
[74] The income earned by Mr. Moffat is through his solely-owned corporation, Equity Growth Reality Inc. (“Equity Growth”). This corporation continues to be active. Equity Growth last generated an income during 2020. Two accounts dated July 16, 2020 for commissions totaling $240,000 were rendered by Equity Growth. There is significant undistributed income within Equity Growth as the amount of a little over $116,000 remains in Equity Growth’s bank account as disclosed in Mr. Moffat’s financial statement and acknowledged by him during his testimony.
[75] The commission income earned by Mr. Moffat is not reflected in its entirety by examining Mr. Moffat’s personal income tax returns. In understanding the amount of money available to Mr. Moffat for spousal support, it is preferable to pierce the corporate veil and examine the income earned by Equity Growth because this is a solely-owned corporation: see, for example, Wildman v. Wildman, O.J. No. 3966 (Ont. C.A.).
[76] No financial statements from Equity Growth were produced. However, the Canada Revenue Agency assessments regarding Equity Growth’s T2 corporate income tax returns were filed as exhibits covering the period February 1, 2016 to January 31, 2021, and for the year ending January 31, 2022, copies of tax documents were filed for that fiscal year. These documents provided some details as to revenue and expenses, including expenses for salary, wages, and management and administrative fees.
[77] Mr. Moffat’s current personal income tax return information was provided for the years 2016 to 2021 inclusive, but did not include copies of slips such as T4’s. It is reasonable to attribute to Mr. Moffat the expenses shown for salary/wages/management and administrative fees disclosed in Equity Growth’s tax returns.
[78] A reasonable approximation of income available to Mr. Moffat for spousal support based on the corporate income tax returns is to take the net income for each year where revenue is generated and add back the expense for salary/wages/management and administrative fees.[^1] The following table is a summary of this information for the six fiscal years provided for Equity Growth[^2]:
| Equity Growth year end Jan. 31 | Total revenue | Net income (loss) less expenses plus add back expenses for salary, wages or management/admin. fees | Total Expenses | Net Income (loss) | Salary, wages or management/admin. fees |
|---|---|---|---|---|---|
| 2017 | $224,262 | $190,681 | $171,650 | $52,612 | $138,069 |
| 2018 | $146,000 | $110,671 | $168,365 | ($22,365) | $133,036 |
| 2019 | NIL | $83,697 | ($83,697) | $59,667 | |
| 2020 | NIL | $23,390 | ($23,390) | NIL | |
| 2021 | $241,111 | $218,079 | $64,593 | $176,518 | $41,561 |
| 2022 | NIL | $31,774 | ($31,774) | $5000 | |
| Totals | $611,373 | $519,431 |
[79] As a comparison, the table below shows Mr. Moffat’s line 150 (or line 15000) income.[^3] The T4 income is shown separately as this would be Mr. Moffat’s income from Equity Growth. For 2020 and 2021 it is noted that Mr. Moffat discloses “other income”; however, no details are provided as to the source of this income.
| Year | Total Income per Line 150 (or line 15000) | T4 Income | Other Income (source not explained) |
|---|---|---|---|
| 2016 | $141,388 | $106,200 | |
| 2017 | $150,286 | $117,250 | |
| 2018 | $85,312 | $51,500 | |
| 2019 | $32,722 | NIL | |
| 2020 | $70,918 | NIL | $35,600 |
| 2021 | $57,446 | $6143 | $15,178 |
[80] From 2016 to 2021, Mr. Moffat’s line 150 (or line 15000) income includes his LIF, ranging from a low of $16,816 in 2019 to a high of $19,208 in 2021.
[81] From 2016 to 2021, Mr. Moffat’s CPP and OAS combined benefits ranged from a little over $15,000 in 2016 to over $16,300 in 2021.
iii. Ms. Moffat’s Financial and Other Circumstances
[81] At the time of trial, Ms. Moffat’s sale of her residence in Port Rowan had closed recently on June 1, 2022. Ms. Moffat had not purchased another residence at the time of trial as she was residing in London with her daughter and her daughter’s family.
[82] Ms. Moffat had sold the former matrimonial home referred to in the separation agreement a number of years ago, following which she purchased the residence in Port Rowan.
[83] There is no dispute that Ms. Moffat was first made aware of Mr. Moffat’s desire to terminate spousal support via correspondence received from Mr. Moffat’s counsel in or about July 2019. It was on the following month, as noted earlier in these reasons, that the spousal support payments ceased.
[84] I accept Ms. Moffat’s evidence that the sudden termination of spousal support payments, with no prior notice, caused her serious financial ramifications, resulting ultimately in her decision to sell her residence. I accept also Ms. Moffat’s evidence that until the spousal support payments stopped that she was managing her expenses, was able to pay her bills and she had no intention to sell her residence.
[85] The financial pressures suffered by Ms. Moffat from nonpayment of spousal support caused her to default on various debt obligations including credit cards. This resulted in judgments against Ms. Moffat. During this time, Ms. Moffat borrowed $35,000 from her daughter and approximately $25,000 from her nephews in order to meet expenses. Ms. Moffat later repaid her daughter and nephews from the sale proceeds of the Port Rowan residence.
[86] Ms. Moffat’s financial statement sworn October 21, 2022, just prior to trial, discloses a net worth of a little over $1.2 million. The purchase of the Port Rowan residence proved to be a good investment for Ms. Moffat. She sold that residence for $1.5 million. After payment of the mortgage and paying all judgment creditors and legal expenses relating to the sale of the property, Ms. Moffat received net sale proceeds of a little over $1.253 million. It was out of that amount that she repaid the money she borrowed from her family.
[87] Ms. Moffat’s net worth, almost entirely, is attributable to the net sale proceeds. She has no other cash assets, or RRSP’s or private pensions. Ms. Moffat intends to use some of the sale proceeds to purchase another residence.
[88] Ms. Moffat’s only ongoing income is from CCP and OAS, currently totaling $1151 monthly. Ms. Moffat also discloses interest income in the amount of $891 per month from investing $500,000 of the net sale proceeds into a guaranteed investment certificate at 2.14% annual interest.
[89] Ms. Moffat’s tax returns for the years 2016 to 2021 confirm that her income consisted primarily of spousal support, CPP and OAS.
[90] During the course of this proceeding, as a result of the $240,000 commission income received by Mr. Moffat’s corporation, Equity Growth, in July 2020, the parties entered into interim minutes of settlement whereby Mr. Moffat agreed to pay spousal support of $4,500 per month for the period commencing September 1, 2020 up to and including August 1, 2021. This amount was the monthly equivalent of the weekly spousal support set out in the Marshman order. In addition, the minutes of settlement confirmed that Mr. Moffat was obligated to continue paying the life insurance premiums for the period September 1, 2020 to August 1, 2021.
iv. Mr. Moffat: The Trust Fund
[91] During Mr. Moffat’s evidence-in-chief, it was suggested to him that he is a trustee of a discretionary trust that is not shown in his financial statement. Mr. Moffat was asked about what he can tell the court regarding this discretionary trust.
[92] Mr. Moffat replied that it was money given to him by his parents, that he has set it aside “rather than have it intermingled with other things.”
[93] From that point on, Mr. Moffat’s evidence-in-chief resembled an attempt to coax information from him, as if Mr. Moffat was in an examination for discovery, at times bordering on cross-examination.
[94] Mr. Moffat’s mother had predeceased his father. When asked whether his father’s will set up a trust, Mr. Moffat indicated that he just got the cash, and that he put it in a trust, “… sort of set aside…” In response to a question from the court whether Mr. Moffat meant he received the cash following his father’s passing, Mr. Moffat replied: “Yes.”
[95] Mr. Moffat told the court, that his father, who was age 102 when he passed away, had expressed to Mr. Moffat that “he wasn’t happy” about the fact that Mr. Moffat was paying spousal support to Ms. Moffat. In responding to a question whether his father did anything to protect himself and Mr. Moffat with respect to Mr. Moffat’s spousal support obligation, Mr. Moffat recalled that there were conditions on the trust that his father put together. Mr. Moffat elaborated[^4]:
“Well, he was trying to prevent, um, the wreckage we were going through with [Ms. Moffat] and I separating, and he wanted to know the assets that he was providing were intact and not attachable.”
[96] When asked to tell the court his understanding of the terms or conditions of the trust, Mr. Moffat testified that his father thought it would be better to use the trust “for other things than paying [Ms. Moffat].” Mr. Moffat’s evidence as to the identity of the trustees was somewhat murky. Initially, Mr. Moffat indicated he did not recall – that he would have to look at the documents. When asked again if he knew who the trustees were, Mr. Moffat indicated that “presumably, I’m one of them.” He testified that the people at the TD Bank are looking after the trust.
[97] Mr. Moffat’s counsel attempted to learn from Mr. Moffat how much money was in the trust, asking was it $100? or $100,000? or $1 million? Mr. Moffat resolutely demurred giving any estimates. He would have to get a report from the people that manage the trust.
[98] Mr. Moffat, sensing perhaps that he was being somewhat frugal with information as to how much money was in the trust, explained to the court that he knew he was going to sound rude but that he did not spend all his time “looking at my records or my financial position.”
[99] The examination-in-chief then returned to whether Mr. Moffat could recall, or did he have any knowledge about who the beneficiaries are and who can be paid money from the trust. Mr. Moffat explained that he can be paid money from the trust, that “It’s pretty much my money.” Mr. Moffat then clarified for the court that Mr. Moffat thought he is the only one “that gets into the trust.” He clarified that he was the only beneficiary.
[100] When asked what happens to the money on his death, Mr. Moffat was not sure, but he thought that his current partner and his daughter might be beneficiaries.
[101] Mr. Moffat understandably may have had some difficulty recalling the financial or other details regarding the trust, given his memory issues. The demeanor displayed by Mr. Moffat while he was testifying was one of annoyance at being asked questions regarding the trust. I do find on the evidence that there is a trust, that likely it was created by Mr. Moffat’s father, that Mr. Moffat is a trustee and that he is the beneficiary. It is unclear whether the trust is inter vivos or testamentary.
[102] Mr. Moffat’s failure to inform himself as to the terms of the trust and to provide this information to Ms. Moffat and to the court constitutes deliberate financial nondisclosure. Mr. Moffat’s total assets, including availability of trust funds, are relevant, and particularly so considering the unique wording of the separation agreement and that the court is dealing in part with the payment of spousal support arrears.
[103] It is inexplicable why, during the years this litigation was ongoing, that Mr. Moffat failed to disclose particulars regarding the trust. Even during the course of the trial, it was open to Mr. Moffat to obtain documentation regarding the trust, including its value. He chose not to do so, despite the court’s concerns about this nondisclosure expressed during Mr. Moffat’s evidence-in-chief.
[104] This nondisclosure, I find, is unacceptable and unreasonable. It hampers and impedes this court’s ability to weigh and consider all necessary factors including Mr. Moffat’s “means” as required by s. 15.2(4) of the Divorce Act.
[105] The characterization of nondisclosure as the cancer of family law was summarized by the Court of Appeal for Ontario in Leitch v. Novac, 2020 ONCA 257 (Ont. C.A.), at para. 44 (quoting Leskun v. Leskun, 2006 SCC 25 (S.C.C.)):
[44] As the Supreme Court suggested in Leskun v. Leskun, 2006 SCC 25, [2006] 1 S.C.R. 920 (S.C.C.), at para. 34, nondisclosure is the cancer of family law. This is an apt metaphor. Nondisclosure metastasizes and impacts all participants in the family law process. Lawyers for recipients cannot adequately advise their clients, while lawyers for payors become unwitting participants in a fraud on the court. Judges cannot correctly guide the parties to a fair resolution at family law conferences and cannot make a proper decision at trial. Payees are forced to accept an arbitrary amount of support unilaterally determined by the payor. Children must make do with less. All this to avoid legal obligations, which have been calculated to be a fair quantification of the payor's required financial contribution. In sum, nondisclosure is antithetical to the policy animating the family law regime and to the processes that have been carefully designed to achieve those policy goals.
v. Discussion: statutory provisions and jurisprudence
[106] This case proceeds, as noted earlier, pursuant to s. 15.2 of the Divorce Act. As such, unlike a variation proceeding under s. 17, there is no threshold of having to establish a material change in circumstances.
[107] The court shall take into account various factors as set out in s. 15.2(4):
Factors
(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including
(a) the length of time the spouses cohabited;
(b) the functions performed by each spouse during cohabitation; and
(c) any order, agreement or arrangement relating to support of either spouse.
[108] Any order providing for spousal support should consider the four objectives listed in s. 15.2(6).
[109] An unusual aspect of the agreement was that it addressed specifically that the quantum of spousal support was beyond Mr. Moffat’s present financial means, and that Mr. Moffat was prepared to “find the money” and even to borrow the money to meet his payments.
[110] Also noteworthy is the provision requiring Mr. Moffat to disclose his “complete financial picture” in the event that he seeks to reduce spousal support.
[111] Mr. Moffat argued that the separation agreement did not limit him when asking for a reduction in spousal support to the circumstances listed in the agreement. Mr. Moffat submitted that there was no specific provision enjoining him from a general right to seek a reduction in spousal support. He submitted this was in contrast to Ms. Moffat where the agreement did enjoin Ms. Moffat from seeking an increase in spousal support.
[112] I do not find that it is necessary to delve deeply into the scope of the variation clause. First, as argued by Mr. Moffat, the court’s jurisdiction in dealing with spousal support, including a spousal support order pursuant to s. 15.2, cannot be ousted by an agreement: see in particular, relied on by Mr. Moffat, L.M.P. v. L.S., 2011 SCC 64 (S.C.C.), at para. 15. Rather, the agreement is one factor to be considered. Secondly, the reasons advanced by Mr. Moffat in reducing spousal support are in any event related to his health and declining ability to earn an income and fell within the broad scope of the variation clause.
[113] The case at bar does not attract the two-stage analysis as discussed in Miglin v. Miglin, 2003 SCC 24 (S.C.C.), as the separation agreement was not final in the sense that variation of spousal support was permitted by Mr. Moffat, and neither party was seeking to “override” the separation agreement.
[114] I address the applicability of the Spousal Support Advisory Guidelines (“SSAG”). The SSAGs are presumptive and any departure requires explanation: McKinnon v. McKinnon, 2018 ONCA 596 (Ont. C.A.), at para. 24: Slongo v. Slongo, 2017 ONCA 272 (Ont. C.A.), at paras. 105 and 106.
[115] Neither party provided SSAG calculations and neither party placed any significant emphasis on the SSAGs.
[116] I find that the terms of the separation agreement, the manner in which the quantification of spousal support was arrived at and the settlement leading to the Marshman order are not conducive to a SSAG analysis.
vi. Discussion – how should Mr. Moffat’s income be calculated for purpose of this proceeding?
[117] Mr. Moffat’s income is cyclical in nature and dependent on earned commissions. Mr. Moffat’s personal income history, and Equity Growth’s income history are summarized in the tables referred to earlier.
[118] Given the pattern that income was earned by Equity Growth, a reasonable approach in calculating Mr. Moffat’s income available for spousal support purposes would be to take the average of the income earned for the period January 1, 2016 up to March 31, 2022, the latter date being just prior to April 1, 2022 which is the date that spousal support payments are terminated as discussed later in these reasons. This approach would ignore any income earned by Equity Growth for the month of January 2016; however this would not be a material factor in estimating income.
[119] The effect of this approach would be to look at income earned by Equity Growth during the period starting in 2016 which is two years prior to 2018, the latter being the first year for which Mr. Moffat seeks to vary spousal support.
[120] This approach takes into account that Mr. Moffat may generate a significant income from Equity Growth during a particular fiscal year, which Mr. Moffat can then access to pay spousal support in subsequent years when Equity Growth may have little or no income.
vii. Discussion – Mr. Moffat’s income available for spousal support for the period January 1, 2016 to March 31, 2022; and s. 15.2(4) and s. 15.2(6)
[121] The period from February 1, 2016 to March 31, 2022 is equivalent to 6.17 fiscal years for Equity Growth (6 years plus 2 months). For the six fiscal years ending January 31, 2022 the table set out earlier disclosed income available to Mr. Moffat in the amount of $519,431. The evidence at trial indicates no income was earned by Equity Growth from February 1, 2022 until March 31, 2022. This amounts to an average annual income of $84,187 ($519,431 divided by 6.17 years) which I round to $84,000.
[122] At the date of separation, Mr. Moffat disclosed pension assets of $184,470. That asset is traceable to Mr. Moffat’s LIF[^5], which, according to his financial statement dated March 2, 2020, had a value of $319,907. The issue becomes whether the equalized portion of Mr. Moffat’s LIF income should be considered for spousal support purposes. Mr. Moffat provided no calculations as to what portion of his LIF income was derived from the equalized portion of his pension so as to avoid “double-dipping” as discussed in Boston v. Boston, 2001 SCC 43 (S.C.C.).
[123] The valuation-date value of the LIF represents approximately 58% of the LIF as of March 2020. This would be the equalized portion. As an estimate it would be reasonable to consider that 42% of the LIF represents the unequalized portion of the LIF. That approximation would be quite generous to Mr. Moffat because he has been drawing down on the LIF prior to March 2020 and Mr. Moffat has not provided the value of his LIF immediately prior to commencing withdrawals from the LIF.
[124] Taking into account Mr. Moffat’s LIF income as contained in his tax returns and most recent financial statement, for the period January 1, 2016, to March 31, 2022 (6.25 years) the yearly average of the unequalized portion of the LIF is $7,709 which I round to $7,700.[^6]
[125] The foregoing produces an approximate average annual income for Mr. Moffat, in the amount of $91,700 ($84,000 + $7,700) from Equity Growth and the unequalized portion of his LIF.
[126] I do not consider Mr. Moffat’s income from CPP and OAS for spousal support purposes.
[127] For the years 2019, 2020 and 2022 Equity Growth had no revenue and the tax returns indicated a net loss. In one of those years, despite a net loss, there was a payment exceeding $59,000 for salaries and wages. Mr. Moffat provided no financial statements, as noted earlier, for Equity Growth, nor did Mr. Moffat explain why, and for what, expenses were being incurred by Equity Growth in the years where there was no revenue. It was incumbent on Mr. Moffat to provide an explanation. Given Mr. Moffat’s failure to do so, I do not take into account Equity Growth’s net losses in estimating average annual income. However, also I do not consider salaries, wages or management and administration fees for those years. If the losses (reduced by any payments to Mr. Moffat) were considered, it would not affect the final order made below.[^7]
[128] In considering the factors in s. 15.2(4), I take into account that this was a lengthy marriage where Ms. Moffat was a stay-at-home parent and assumed care of the children, enabling Mr. Moffat to pursue his career. As noted earlier, there is a compensatory element to Ms. Moffat’s spousal support entitlement.
[129] Regarding s. 15.2(4)(c), the parties’ separation agreement is an integral part of this case. Both parties wanted to avoid a costly trial. The agreement provided financial security to Ms. Moffat and in turn Mr. Moffat was able to pursue his career knowing his spousal support obligation was capped except for the COLA increase. After returning to court which resulted in the Marshman order, Mr. Moffat continued to pay the lower amount set out in that order. Ms. Moffat did not receive the $1385 per week that was to be paid effective November 21, 2002 pursuant to the agreement.
[130] Historically Mr. Moffat has paid spousal support that is a substantial portion of his reported income on his tax returns. Mr. Moffat provided disclosure from his personal tax returns for the years 2005 to 2012. His average annual line 150 income was a little under $90,000 for those seven years. This is very similar to his average annual income for the years commencing 2016 to 2022 as discussed above. Mr. Moffat provided no income disclosure for Equity Growth for the years 2005 to 2012 inclusive, and therefore it is unknown whether his personal tax returns have disclosed all income available to Mr. Moffat for spousal support purposes for those years.
[131] Considering the objectives listed in s. 15.2(6), the separation agreement continues to advance the objectives of recognizing Ms. Moffat’s childcare role during the marriage, providing Ms. Moffat with financial security and recognizing the disadvantage to Ms. Moffat in foregoing her nursing career. In turn, Mr. Moffat continues to be protected from spousal support increases. Finally, the objectives are met by terminating the spousal support obligations effective April 1, 2022.
[132] The termination of spousal support effective October 25, 2022 was a mutual decision made by the parties. The discussion now focuses on the period January 1, 2018 to March 31, 2022.
viii. Discussion: spousal support for the period January 1, 2018 to end of August 2019
[133] There is no basis to reduce Mr. Moffat’s spousal obligation during this period. The spousal support payable pursuant to the Marshman order for this period was paid by Mr. Moffat as indicated earlier. Mr. Moffat sought a reduction on a retroactive basis when he issued his motion to change in September 2019.
[134] Mr. Moffat had failed to broach the topic of a reduction of spousal support in a timely manner.
[135] There was little, if any, credible evidence that Mr. Moffat, during this period, was unable to work due to medical issues. As discussed previously, Mr. Moffat earned a substantial commission in 2020 which was after this period. I consider also Mr. Moffat’s average annual income available for spousal support.
[136] During this time, Ms. Moffat was financially dependent on the spousal support she was receiving with no expectation that she may have to repay the spousal support received during this period.
[137] I consider that Mr. Moffat’s nondisclosure regarding the trust fund impedes the court’s ability to consider his “means” and “other circumstances” (s. 15.2(4)); and that the nondisclosure deprives Ms. Moffat of her right to know Mr. Moffat’s “complete financial picture.”
[138] I find that Mr. Moffat’s request to reduce spousal support for the 20-month period commencing January 1, 2018 should be denied on the basis of his nondisclosure. Alternatively, for the reasons discussed, that relief also is denied on its merits.
ix. Discussion – spousal support for the period September 1, 2019 to March 31, 2022
[139] This timeframe includes the one-year period from September 1, 2020 to August 31, 2021 that was dealt with pursuant to interim minutes of settlement. The spousal support owing during this period was paid by Mr. Moffat as were the life insurance premiums.
[140] In his pleadings Mr. Moffat seeks to eliminate his spousal support obligation effective January 1, 2019, and also effective September 1, 2019, his obligation to provide ongoing life insurance coverage. Mr. Moffat has filed documentation to substantiate his monthly expense of $547.07 regarding life insurance premiums.
[141] This leaves for the court’s consideration the calculation of spousal support for the periods September 1, 2019 to August 31, 2020 and September 1, 2021 to March 31, 2022.
[142] Considering first the period September 1, 2019 to August 31, 2020, the medical evidence does not suggest Mr. Moffat was unable to work. The letter from Dr. Mawji is dated April 30, 2022, and it does not state with sufficient specificity that Mr. Moffat could not work during this time. Also Mr. Moffat did earn a commission income in July 2020 as mentioned earlier.
[143] There was no indication from Mr. Moffat that he was unable to work during this period; indeed, it was his evidence that at the time of trial he continued to work 30 to 40 hours per week.
[144] Ms. Moffat continued to reside in Port Rowan. She was dependent on the spousal support income. I take into consideration Mr. Moffat’s average annual income.
[145] Again, the nondisclosure issue regarding the trust surfaces, preventing the court from considering all relevant factors.
[146] For the period September 1, 2019 to August 31, 2020 I decline to reduce spousal support and I decline to terminate Mr. Moffat’s obligation regarding life insurance.
[147] I deal next with spousal support for the period September 1, 2021 to March 31, 2022. During this period, while Mr. Moffat continued to work, his medical issues were escalating, and it is noted that the date of the medical report is in much closer proximity to this time frame.
[148] While Mr. Moffat, on his own evidence, was not retired, I do find that the medical report dated April 30, 2022, supports a finding, which I make, that Mr. Moffat was no longer capable of gainful or productive employment at the time of the medical report. I find that no further spousal support should be paid commencing April 1, 2022 and that Mr. Moffat’s obligation regarding maintaining life insurance also should cease as of that date.
[149] I have considered that effective June 1, 2022, on the closing of her sale, that Ms. Moffat had liquid assets available to start drawing down to meet her living expenses.
[150] While the issue of Mr. Moffat’s nondisclosure remains, in my view, once a finding is made that he is not capable of further gainful employment, then the significance of the nondisclosure is diminished. Mr. Moffat should not be expected to pay spousal support in those circumstances.
x. Discussion- quantification of periodic spousal support owing
[151] The weekly spousal support payable pursuant to the Marshman order is equivalent to $4500 per month, as reflected in the interim minutes of settlement.
[152] Mr. Moffat owes spousal support for the period September 1, 2019 to August 31, 2020 (12 months), and for the period September 1, 2021 to March 31, 2022 (seven months).
[153] The total spousal support owing is $85,500 (19 months x $4500). Although no calculation was provided regarding a tax discount to reflect that a lump sum is neither tax deductible nor taxable, I find that some discount is appropriate. After considering the tax returns that have been filed, I find that a reasonable discount is somewhere in the range of 20-25%. I use 22.5% as an estimate. The amount to be deducted for the tax discount therefore is $19,238 ($85,500 x 22.5%).
[154] The net amount owing by Mr. Moffat for periodic support is $66,262 ($85,500 - $19,238). Mr. Moffat is entitled to a credit for life insurance premiums, in the amount of $547.07 per month for the period April 1, 2022 to October 25, 2022 which is approximately equivalent to 6.81 months. The total credit is $3,726 ($547.07 x 6.81).
[155] After allowing for the credit for life insurance, the net amount owing by Mr. Moffat is $62,536 ($66,262 – $3,726). Given Mr. Moffat’s nondisclosure, he is not entitled to any consideration whether the arrears should be paid by instalments. I take into account also that a little over $116,000 remains in Equity Growth’s bank account. The amount owing shall be paid within 30 days.
[156] Although in her pleadings, Ms. Moffat claimed prejudgment interest on any spousal support arrears owing, Ms. Moffat did not provide any sample calculations for prejudgment interest or the prevailing rates for prejudgment interest, nor did Ms. Moffat include any claim for prejudgment interest in the two proposed draft orders that she filed at trial. I decline to order prejudgment interest in relation to periodic spousal support arrears.
ISSUE #3 – MS. MOFFAT’S CLAIM FOR $35,000 LUMP SUM PAYMENT
[157] As discussed earlier, there was reference to this payment in the separation agreement, describing this payment as being in Mr. Moffat’s “sole discretion” (para. 5(d)), and referring to Mr. Moffat “being morally obligated to make” this payment (para. 12(a)).
[158] During his cross-examination Mr. Moffat testified that “morally obligated” meant that the payment is supposed to be made.
[159] It is noteworthy that the separation agreement did not characterize this amount as spousal support, rather it was dealt with under the heading “Equalization Resolution.”
[160] The Marshman order, as noted earlier, had the effect of removing Mr. Moffat’s discretion whether the payment will be made. The timing of the payment was left to Mr. Moffat but it was also subject to be determined by the court.
[161] The Marshman order characterized this amount as spousal support arrears.
[162] Mr. Moffat offered no credible explanation as to why this amount was never paid, even though there was available cash in Equity Growth. Although this amount has been owing for many years, I find that this does not relieve Mr. Moffat of his obligation to make the payment, nor does payment of this amount create financial hardship. Mr. Moffat’s financial nondisclosure is a significant factor precluding Mr. Moffat from claiming financial hardship.
[163] Mr. Moffat shall pay this amount. As to the timing of the payment, Mr. Moffat’s financial nondisclosure militates against any consideration of payment by instalments.
[164] Payment in full shall be made within 30 days. This amount has been described to be without interest in both the separation agreement and the Marshman order. Accordingly, there shall be no prejudgment interest.
ISSUE #4 – MR. MOFFAT’S REQUEST TO FIND MS. MOFFAT IN CONTEMPT OF COURT FOR FAILING TO PROVIDE FINANCIAL DISCLOSURE AS ORDERED
[165] Mr. Moffat’s request to find Ms. Moffat in contempt of court relates to allegations that Ms. Moffat failed to provide documents as ordered by Price J. when he signed the trial scheduling endorsement form on May 9, 2022 at the trial management conference held that day.
[166] Documents ordered to be provided included an up-to-date financial statement, tax returns, notices of assessments for years 2019, 2020 and 2021 and details regarding the sale of Ms. Moffat’s Port Rowan residence.
[167] While Ms. Moffat did attend the trial management conference, she did so without counsel as her previous counsel had obtained an order the previous month removing him as counsel of record.
[168] Ms. Moffat was able to retain her current counsel, Mr. Doran, but that was not until “the eve of trial.”
[169] In family matters, it is not an easy task to retain new counsel when the trial is looming. Ms. Moffat was fortunate that Mr. Doran accepted her case. After doing so, Mr. Doran swiftly ensured Ms. Moffat’s compliance with the disclosure order. The parties agreed during trial that the documents required to be produced were not produced by the deadline as ordered but were produced in October 2022 prior to trial.
[170] Mr. Moffat seeks an order that Ms. Moffat be found in contempt of court, an order declaring that Ms. Moffat has purged her contempt and requiring Ms. Moffat to pay $3200 in costs “on the contempt motion.”
[171] In Greenberg v. Nowack, 2016 ONCA 949 (Ont. C.A.), the test for civil contempt is summarized at paragraphs 25 and 26 (quoting from Carey v. Laiken, 2015 SCC 17 (S.C.C)):
[25] The test for civil contempt was articulated by the Supreme Court in Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, at paras. 33-35:
The order alleged to have been breached must state clearly and unequivocally what should and should not be done;
The party alleged to have breached the order must have had actual knowledge of it; and
The party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act the order compels.
[26] Each element of civil contempt must be proven beyond a reasonable doubt: Carey v. Laiken, at para. 32. A judge has discretion to decline to make a contempt finding where the three-part test has been met where it would be unjust to do so, such as where the alleged contemnor has acted in good faith to take reasonable steps to comply with the relevant court order: Carey v. Laiken, at para. 37.
[172] The contempt motion was not dealt with at trial by reference to affidavit material previously filed on the contempt motion; rather the contempt issue formed part of the viva voce evidence heard at trial.
[173] A copy of the contempt motion was not filed at trial, nor was there any evidence as to whether the proper form of motion was used and whether the motion was served personally. Having said that, no procedural issue was raised by Ms. Moffat as to the manner that the contempt motion was dealt with at trial.
[174] Although Ms. Moffat was subjected to a rigorous cross-examination, Ms. Moffat remained steadfast in articulating her position that she was unable to comply with the order as she had no lawyer, that she needed the assistance of a lawyer to assist her in dealing with the disclosure, that she was in the midst of closing the sale on her Port Rowan residence and that she had to move, that she was trying but having difficulty obtaining a new lawyer and that she had to recuperate from some surgery conducted in August 2022.
[175] However, I am satisfied beyond a reasonable doubt that all three elements have been proven. The order was clear and unequivocal as to what documents had to be produced, and by when; Ms. Moffat had actual notice of the order as she was present at the trial management conference when the order was made; and Ms. Moffat intentionally failed to comply.
[176] In relation to the last element, while Ms. Moffat offered various reasons for noncompliance, she did little, if anything, to provide the documents, including the reporting letter on the sale of her property which she could have obtained easily from the lawyer acting on the sale.
[177] However, having found that the three elements of civil contempt have been established, that does not end the analysis. It is necessary for the court to consider whether it should exercise its discretion and decline to impose a contempt finding: Chong v. Donnelly, 2019 ONCA 799, at paras. 8 and 9.
[178] In Carey v. Laiken, supra, the Supreme Court of Canada noted at paragraph 36 that the contempt power is discretionary and that courts have consistently discouraged its use to obtain compliance with orders; and in paragraph 37, the court left open “… the possibility that a judge may properly exercise his or her discretion to decline to impose a contempt finding where it would work an injustice in the circumstances of the case.”
[179] In Chong v. Donnelly, supra, the Court of Appeal for Ontario held that although it was proper to find that the alleged contemnor had breached the order, that it was not in the interests of justice in the context of that case to add a formal order of contempt which would leave the alleged contemnor with the “opprobrium of a contempt order” (paras. 9 and 12).
[180] Ms. Moffat was faced with some extenuating circumstances as she explained. She found herself without a lawyer and she had difficulty finding a new lawyer to take over the case. Ms. Moffat had to deal with the stress of moving and she also had to convalesce from surgery. Importantly, Ms. Moffat did comply with the disclosure order albeit just prior to trial. Viewed in this context, a finding of contempt would be unjust, and I exercise my discretion and I decline to make a formal order of contempt.
[181] Mr. Moffat’s request for a finding of contempt is dismissed. The costs in relation to the contempt issue shall be dealt with as part of the costs of this proceeding.
[182] I would note that it is difficult to understand Mr. Moffat’s determined pursuit at trial for a finding of contempt against Ms. Moffat when viewed against the background of his own nondisclosure regarding the trust, and in circumstances where Ms. Moffat did eventually provide her disclosure, unlike Mr. Moffat.
COSTS
[183] Considering the final result including the partial final order made during the trial on consent, it appears at first instance that there has been divided success. The parties are encouraged to make best efforts to resolve costs. The order below does permit written costs submissions if there is no resolution.
ORDER
[184] In accordance with the foregoing reasons, I make the following final order:
(1) Within 30 days Mr. Moffat shall pay to Ms. Moffat spousal support arrears fixed in the amount of $97,536.
(2) Other than the costs of this proceeding, and subject to paragraph 3 of this order, Mr. Moffat’s request to find Ms. Moffat in contempt in court and all other claims made by both parties are dismissed.
(3) This final order is without prejudice to the right of either party to bring a proceeding in relation to any other amounts still owing pursuant to the parties’ separation agreement and collateral agreement, both executed during November 1999, and as contemplated in the order of Marshman J. dated October 29, 2004, and in particular paragraphs 4 and 8 thereof.
(4) This final order is made pursuant to the Divorce Act.
(5) Written costs submissions may be made by Mr. Moffat within three weeks of the date of this order; Ms. Moffat’s responding submissions shall be made within three weeks thereafter, and Mr. Moffat’s reply submissions, if any, shall be made within two weeks thereafter. If the issue of costs has been resolved, counsel immediately shall advise the trial coordinator of same. The costs submissions shall be limited to three typed pages double-spaced minimum font 12 (two pages for reply), plus copies of any offers, time dockets or bills of costs, and any cases shall be referenced by hyperlink in the written submissions.
“Justice Victor Mitrow”
Justice Victor Mitrow
Released: February 9, 2023
COURT FILE NO.: FC 1194/97-01
DATE: 2023/02/09
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Peter Belton Moffat
Applicant
- and -
Linda Jane Moffat
Respondent
REASONS FOR JUDGMENT
MITROW J.
Released: February 9, 2023
[^1]: For 2021 and 2022 the deductions are described as management and administration fees; for all other years the deductions are described as salary and wages. [^2]: Total revenue, total expenses and net income (loss) are, respectively, taken from lines 8299, 9368 and 9970 of the corporate tax returns. [^3]: For the years 2016 to 2020 inclusive, the information is from Mr. Moffat’s notices of assessment (or reassessment) included in his personal income tax brief, exhibit #3. For 2022, no notice of assessment was included and the information is from Mr. Moffat’s tax return. [^4]: Transcript, Mr. Moffat’s evidence-in-chief October 25, 2022, pg. 20, line 23-27 [^5]: See exhibit 2, and in particular letter from Mr. Moffat’s counsel to Ms. Moffat’s counsel dated February 28, 2020. [^6]: For 2016 to 2021 inclusive, the total LIF income was $109,913. The 2022 LIF income is equivalent to $19,208 annually as disclosed in Mr. Moffat’s financial statement, or $4,802 from the three month period from January 1, 2022 to March 31, 2022. For the period of 6.25 years starting January 1, 2016, the average annual unequalized portion of the LIF income is $7,709 (($109,913 + $4,802) x 42% ÷ 6.25). [^7]: Mathematically, the total of the net losses for 2019, 2020 and 2022 reduced by salaries, wages, management and administrative fees (which would have been available to Mr. Moffat) totaled approximately $74,000 over 6.17 years, equivalent to an annual amount of little under $12,000.