COURT FILE NO.: FS-19-00012872-0000 DATE: 20240719
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
N.Z.N. Applicant – and – M.R.N. Respondent
Counsel: Elan Mendelsohn, Agent for April 3rd and April 4th, 2024. N.Z.N., in person for June 5th and June 6th, 2024 Anna Towlson, for the Respondent
HEARD: April 3rd and April 4th, 2024, with the Applicant’s agent, Mr. Mendelsohn, and June 5th and June 6th, 2024, with the Applicant, in person
M. Kraft, J.
Partial Reasons for Decision
Overview
[1] A 9-day trial took place in this matter in 2023. The outstanding issues at that trial were retroactive and prospective child and spousal support and property division. Prior to that trial, the parties had settled their parenting issues. Partial Reasons for Judgment were released by me on January 3, 2024 (“January 3rd, 2024 decision”).
[2] N.Z.N., age 48, and M.R.N., age 43, were married for 13 years. They have two children, a son, J, age 15, and a daughter, O, age 11. They separated on August 7, 2019. M.R.N. has a son from another marriage who is 25 years old. N.Z.N. was employed as a medical doctor by the Canadian Armed Forces (“CAF”) during the entirety of the parties’ marriage. In May 2022, he was released from the CAF on a medical leave. N.Z.N.’s pension with the CAF is currently in pay. Except for a very brief period, M.R.N. did not work outside of the home. The family moved at least 5 times to different army bases in Canada and the United States in support of N.Z.N.’s military career.
[3] After the hearing of the 9-day trial, the parties agreed to direct the CAF to transfer 50% of the Family Law Value (“FLV”) of N.Z.N.’s military pension to M.R.N. The FLV of N.Z.N.’s pension was calculated to be $770,890. On March 30, 2023, the parties consented to an order that with pre-judgment interest, calculated at the rate of 2% for 1322 days, the total amount of N.Z.N.’s pension to be transferred to M.R.N from the CAF is $826,732 (FLV + prejudgment interest). This did not include post-judgment interest.
[4] Despite my consent order, dated March 30, 2023, the CAF did not actually divide the pension until 9 months later, on December 7, 2023, at which time M.R.N received payments totalling $434,071.41, as follows:
a. The sum of $315,541.91 was paid by cheque, dated November 28, 2023 to RBC, reference number 470255563, about which M.R.N was informed by RBC on December 5, 2023; b. The sum of $118,529.50 was paid by cheque, dated November 28, 2023, directly to M.R.N, received by her on December 6, 2023, being the RCA benefits, after taxes were deducted at source.
[5] The details surrounding the delay in the transfer of the FLV of N.Z.N.’s pension are outlined in my January 3, 2024 decision at paragraphs 10-11.
[6] There was a significant shortfall of $392,660.69, being what M.R.N. was expecting to receive from the CAF from the pension transfer set out in the consent order, dated March 30, 2023 of $826,732 and what she did receive. The issue then arose as to how the shortfall of $392,660.69 was to be paid to M.R.N by N.Z.N.. This is further discussed below in paragraph 14.
[7] As a result, the property division issues, along with the issue of N.Z.N.’s income for support purposes were adjourned to be heard at a further three-day trial which was to take place April 2nd, 3rd, and 4th, 2024.
[8] My January 3, 2024 decision determined the two issues of (1) what amount of retroactive and prospective child support is owing by N.Z.N. to M.R.N.?; and (2) what amount of retroactive spousal support is owing by N.Z.N. to M.R.N. up to and including April 30, 2022?
[9] The major aspects of the Order arising from my January 3rd, 2024 decision are as follows:
a. N.Z.N. was to pay M.R.N. s.7 expense arrears in the fixed sum of $8,449; b. For period from the date of separation to and including December 31, 2023, N.Z.N. was to pay M.R.N. spousal support arrears fixed in the sum of $215,788; c. Starting January 1, 2023 and on the first day of each month on a temporary basis, N.Z.N. was to pay M.R.N. child support in the sum of $4,220 a month based on his estimated 2023 income of $328,584. d. Until further order of the court, the order of Shore, J., dated March 31, 2021 shall remain in force in terms of the quantum of temporary spousal support such that N.Z.N. is to pay M.R.N. temporary spousal support of $2,983 a month. e. Starting January 1, 2024, M.R.N. is to be imputed with an income equal to the minimum wage in Ontario or the income she is earning, whichever amount is higher for child support purposes. f. Up to 100% of N.Z.N.’s Canadian Forces Pension shall be garnished to pay his support arrears until paid in full.
[10] On December 21, 2023, M.R.N. received an offer of employment from MNP LLP as a receptionist for a four-month contract from January 22, 2024 to May 3, 2024, earning a salary of $45,000 a year. On February 9, 2024, M.R.N. received a further offer of employment from MNP LLP as an administrative assistant, starting February 12, 2024, earning $45,000 as a permanent position. She continues to be employed at this level of income.
[11] Two days of trial were heard on April 3rd and 4th, 2024, at which time the trial was adjourned due to illness on the applicant’s agent’s part. The last two days of trial took place on June 5th and June 6th, 2024 at which time N.Z.N. discharged his agent and was self-represented for the last 2 days of trial.
Shortfall Agreement
[12] The parties reached a Consent, which was signed on June 6, 2024 (the day the trial resumed), providing for N.Z.N.to make specific monthly payments to M.R.N from his CAF Pension, which is in pay, to address the shortfall and what remained owing by him on the equalization payment. The terms of the consent are as follows:
a. Starting June 1, 2024 and on the first day of each following month through to November 30, 2034, N.Z.N. agreed to pay M.R.N, 18.44% (currently $2,304.52) of his monthly CAF pension to make up the shortfall. This monthly sum is fixed and not subject to review or variation. The payments are after tax payments and not taxable in M.R.N’s hands. This periodic monthly payment is in addition to any other periodic payments N.Z.N. is ordered to pay M.R.N. b. N.Z.N. owes M.R.N support arrears of $16,629.43 for 2022; c. N.Z.N. owes M.R.N support arrears of $26,455.87 for 2023; d. For the period January 1, 2024 to May 1, 2024, N.Z.N. owes M.R.N support arrears of $2,304.52 a month, for a total of $11,522.60. e. The arrears referred to in b. – d. above are after-tax amounts, meaning they are not taxable in M.R.N’s hands and not tax deductible by N.Z.N. All arrears are enforceable by the Family Responsibility Office (“FRO”). f. The unequalized portion of N.Z.N.’s CAF Pension is 46.8% before age 60; g. The unequalized portion of N.Z.N.’s CAF Pension is 63.8% between the age of 60 and 65. h. The unequalized portion of N.Z.N.’s CAF Pension is 64.2% after age 65. i. The issue of post-judgment interest is outstanding.
[13] At the end of the trial, N.Z.N. asked for additional time to prepare closing submissions in writing. Accordingly, on June 6, 2024, I released an Endorsement granting N.Z.N an additional 14 days to serve and file his closing submissions and granting M.R.N 14 days to serve and file her closing submissions from when she is served with N.Z.N.’s closing submissions.
[14] N.Z.N. did not file closing submissions, despite being given this opportunity to do so. M.R.N. served and filed her closing submissions on July 4, 2024.
Issues Left to be Determined
[15] The issues arising in this 4-day trial for me to determine are:
a. What is N.Z.N.’s income for support purposes in 2022, 2023 and 2024? b. What is N.Z.N.’s retroactive spousal support obligation from May 1, 2022 to August 1, 2024? c. What is N.Z.N.’s child support obligation for the period starting August 1, 2024 onward? d. What is N.Z.N.’s spousal support obligation for the period starting August 1, 2024 and onward? e. What does N.Z.N. owe in terms of retroactive s.7 expenses, if any? f. What is the equalization payment N.Z.N. owes?
[16] The facts of this case are outlined thoroughly in my January 3rd, 2024 decision and need not be restated in this judgment.
[17] M.R.N.’s entitlement to spousal support is outlined thoroughly in my January 3rd, 2024 decision. Specifically in para. 148 I found that M.R.N. has a strong compensatory claim for spousal support and that she is entitled to share in the increase in N.Z.N.’s income post-separation.
[18] At paragraph 149, I determined that in calculating N.Z.N.’s income for spousal support, the court will use his actual income earned in each calendar year. With respect to the range of spousal support, I found that the mid-point between the mid-range and the high-range of the Spousal Support Advisory Guidelines (“SSAGs”) is appropriate for the period from the date of separation onward. As a result, I will apply the same range of spousal support as found in the SSAGs for the period of spousal support from May 1, 2022 onward.
[19] In calculating retroactive spousal support, I explained that the ranges generated by the SSAGs must be adjusted to account for the fact that a retroactive sum of spousal support must be “netted down” to account for its non-taxable status in M.R.N.’s hands, and is non-tax deductible states in N.Z.N.’s hands. I used M.R.N.’s after-tax benefit to calculate the retroactive spousal support and intend to apply the same formula to retroactive spousal support for 2022 and onward.
M.R.N.’s Position
[20] M.R.N. seeks the following orders:
a. N.Z.N. to pay her s.7 expense arrears of $7,770 for the period August 1, 2023 to July 2024; b. The parties share the children’s ongoing s.7 expenses proportionately with M.R.N. paying 29% and N.Z.N. paying 71% using an income of $45,000 a year for M.R.N. and $522,407 for N.Z.N.’s 2024 income; c. As of May 31, 2024, there are no arrears of table child support guidelines support owing by N.Z.N. to M.R.N.; d. Starting June 1, 2024, and on the 1st day of each month to and including December 1, 2024, N.Z.N. shall pay M.R.N. child support in the sum of $6,546 a month for the two children, based on an imputed income of $522,407 for N.Z.N.; e. Starting on January 1, 2025 and on the 1st day of each following month, N.Z.N. shall pay M.R.N. child support in the sum of $7,297 a month for the two children, based on an imputed income of $585,021 for N.Z.N.. f. N.Z.N. shall pay M.R.N. spousal support arrears fixed in the sum of $435,623.82 for the period from the date of separation to and including May 31, 2024. g. Starting June 1, 2024 and on the 1st day of each following month through to and including December 1, 2024, N.Z.N. shall pay M.R.N. spousal support in the sum of $10,413.50 based on an imputed income for 2024 of $522,407 and M.R.N.’s 2024 income of $45,000. h. Starting January 1, 2025 and on the 1st day of each following month, N.Z.N. shall pay M.R.N. spousal support in the sum of $11,233 a month based on his estimated income for 2025 of $585,021 and M.R.N.’s estimated income in 2025 of $45,000. i. On consent, N.Z.N. shall pay M.R.N., an equalization payment of $61,133.58, plus prejudgment interest (2%) from the date of separation (August 7, 2019) to the date of the order.
[21] M.R.N.’s position is that N.Z.N. is in arrears of ongoing support arising from my January 3, 2024 decision since the order was never taken out and, therefore, not enforceable by FRO. She argues that N.Z.N. has also agreed to make up for the significant shortfall in the division of his pension by paying her monthly payments, above and beyond the support. M.R.N. argues that, as a result, she is highly prejudiced by not having received monies from N.Z.N. when they were due. She is further prejudiced by receiving monthly installments on the pension shortfall as opposed to by way of lump sum because she loses the opportunity to invest, purchase real estate and is reliant on the FRO to collect the support. N.Z.N., on the other hand, has benefitted. His income has continued to increase post-separation and he has re-partnered and is sharing his living expenses. Finally, M.R.N. takes the position that all of the pension income N.Z.N. earns should be used to calculate his income for support purposes and she meets the exception to the rule that double dipping isn’t fair, because she has a compensatory claim for spousal support, she is in dire need of support and there is a persisting economic hardship from the marriage and its breakdown. For all of these reasons, M.R.N. argues this is an appropriate case for double dipping.
N.Z.N.’s Position
[22] N.Z.N.’s position is that only the portion of his pension income that was not equalized should be considered his “income” for spousal support purposes, which is 82.4% of his income, since 17.6% of his pension income is attributable to the Family Law Value of the pension which was equalized. This amounts to a reduction of $20,654 annually from the calculation of N.Z.N.’s income for spousal support purposes, according to his pension actuary expert. Further, N.Z.N. argues that since his Manulife disability income payments ceased on May 20, 2024, the spousal support should be further reduced from that time onward. These issues were raised in the first 9 days of the trial but did not form part of my January 3, 2024 decision. Further, the spousal support arrears calculated in my January 3, 2024 decision did not include 2022 since N.Z.N.’s CAF pension began to be in pay as of May 2022. Finally, N.Z.N. argues that since he has not signed a contract for new employment with Calian, even though an offer of employment was made to him, that potential income ought not to be considered as part of his income for support purposes because he may not be able to fulfil the position.
Issue One: What was N.Z.N.’s Income for support purposes in 2022, 2023 and 2024?
Income for 2022
[23] During the trial, N.Z.N.’s agent confirmed that he agreed with the income calculations for N.Z.N. prepared by M.R.N.’s counsel for 2022 and 2023.
[24] These calculations are that N.Z.N.’s income in 2022 amounted to $449,003, comprised of the following:
a. Employment income from CAF to May 2022 of $148,777; b. Severance income of $64,923; c. VAC income replacement benefits at 15% at $87,045; d. CAF superannuation pension income for May to December of $52,963; e. Taxable capital gain at MD Equity of $19; f. Manulife LTD payments of $57,099; g. RCA income, box 16 of $31,252; h. VAC disability benefits, non-taxable of $3,210; and i. RPP deduction of $14,068.
[25] On this level of income for N.Z.N. of $449,003, the table amount of child support under the Federal Child Support Guidelines, S.O.R./97-175 (“CSG”) amounts to $5,665 a month, or $68,980 a year.
Income for 2023
[26] The parties have agreed that N.Z.N.’s income in 2023 amounted to $391,726
a. Employment income of $7,778; b. Veteran’s benefits of $87,045; c. CAF superannuation pension income of $89,616; d. Taxable capital gains for MD Equity Fund of $4; e. Manulife LTD income of $117,916; f. RCA taxable income of $53,854; g. Retiring allowance of $3,641 h. VAC Non-taxable disability benefits of $14,810 i. RPP deduction of $14,068.
[27] On this level of income for N.Z.N. of $391,726, the table amount of child support under the CSG amounts to $4,978 a month, or $59,736 a year.
[28] During cross-examination N.Z.N. acknowledged that my January 3, 2024 decision based his table child support obligation on the court estimating an income for him in 2023 of $328,584, which was the best information the court had at the time the 9-day trial was heard. N.Z.N. agrees that now that his 2023 income is known to have been $391,726, there will be arrears of child support owing by him for 2023.
[29] N.Z.N. also admitted that despite my January 3, 2024 decision requiring him to file his 2022 income tax return he did not do so. As well, despite having received M.R.N.’s 2022 income tax return and an updated sworn financial statement for M.R.N. for this trial, N.Z.N. did not file an updated sworn financial statement.
[30] Despite N.Z.N. agreeing with M.R.N.’s calculation of his 2022 income, he submits that 100% of his pension income from the CAF received should not be included in the calculation of his income for support purposes at $89,616 but, rather, only 53.2% of his pension income should be considered income for support purposes because that represents the unequalized portion of his pension.
Income for 2024
M.R.N.’s Position on N.Z.N.’s 2024 Income
[31] M.R.N. submits that N.Z.N.’s 2024 income for support purposes is $522,407, comprised of the following sources:
a. VAC IRB income received from January to May 2024 of $21,114; b. Veteran’s Independence program grant of $1,760; c. CAF Pension including RCA of $149,968; d. Taxable capital gains in his MD Equity Fund of $4; e. Manulife Wage Loss replacement for 5 months of $49,131; f. Retiring Allowance of $3,641; g. Self-employment net income from CFEME of $273,000 h. Disability benefits which are non-taxable of $11,054.
[32] The self-employment income referred to in para. 31(g) above is based on the offer of employment N.Z.N. received from Calian for the CAF position of a Physician Specialist in Aerospace Medicine for the CFEME (which stands for the Canadian Forces Environment Medical Establishment). The hourly rate offered to N.Z.N. was $210 for a 37.5 hour work-week, which amounts to $409,500 a year or $34,125 a month. M.R.N.’s argument is that N.Z.N. ought to be imputed with income totalling $273,000 in 2024 which would be his monthly gross income of $34,125 for 8 months for the period May to December 2024, since N.Z.N. was clearly offered the position on April 26, 2024 and could have accepted the position and earned that income. M.R.N. also submits that 100% of N.Z.N.’s pension income should be included in the calculation of his income for support purposes.
N.Z.N.’s Position on his 2024 Income
[33] N.Z.N. argues that only 53.2% of his CAF pension income should be used to calculate his income for support purposes, taking his pension income down from $149,968 to $79,782.98, since that is the unequalized portion of his pension. This would reduce his income for 2024 to $452,221.98. Further, although not clearly articulated, N.Z.N.’s position is that he has not signed a contract with Calian, it is uncertain that he will be able to do so because of his licensing issue with the CPSO and even if he does accept the position, it is only open until September 30, 2024. Assuming he accepts the position in mid-June 2024, after this trial, it would follow that he would only want to include 3.5 months of potential income from Calian which would be $119,437.50 as opposed to $273,000. Therefore, according to N.Z.N., his 2024 income for support purposes should be $298,659.48.
The Law on Double Dipping
[34] The main issue in dispute in determining N.Z.N.’s income for support purposes arises from the fact that his CAF pension is currently in pay and he has equalized his pension with M.R.N.. The term “double recovery”, also referred to as “double dipping”, is used to describe the situation where a pension, once equalized as property, is also treated as income from which the pension-holding spouse must make spousal support payments.
[35] In Boston v. Boston, 2001 SCC 43, the SCC held that double dipping – allowing “the payee spouse to reap the benefit of the pension both as an asset and then again as a source of income” is “generally unfair”, particularly where the payee spouse retains the asset and does not make a reasonable attempt to convert it into income.
[36] However, in cases where the payee spouses does not receive the capital asset by way of lump sum, that spouse cannot retain the asset to grow his/her estate. Despite the general rules that “double dipping” is unfair, “double recovery cannot always be avoided. In certain circumstances, a pension which has previously been equalized can also be viewed as a maintenance asset.” Further, double recovery may be permitted where the payor spouse has the ability to pay, where the payee spouse has made a reasonable effort to use the equalized assets in an income-producing way and, despite this, an economic hardship from the marriage or its breakdown persists. Double recovery may also be permitted in spousal support orders/agreements based mainly on need as opposed to compensation.
[37] In this case, M.R.N. did not receive the correct amount on account of the FLV of N.Z.N.’s pension. She had no option to reach a consent agreement to receive the shortfall of close to $400,000 by way of periodic payments, making it impossible for her to invest the monies and convert it into income. On this basis, M.R.N. seeks to receive support considering N.Z.N.’s entire income, even that which comes from the CAF pension because it is the only fair way to continue support. M.R.N. submits that an economic hardship from the marriage and its breakdown continues to persist which is why her support should come from income earned by N.Z.N., even income derived from the equalized part of his CAF pension.
[38] In Want v. Gathier, 2021 ONSC 7595, the court summarizes cases in which the exception to the double dip was applied:
[151] In the recent case of Melis v. Zwanenburg, 2017 ONSC 613, 92 R.F.L. (7th) 159, the Ontario Superior Court of Justice again considered the issue of double-dipping. Justice Beaudoin found that the husband was entitled to continue to receive spousal support and double dip. The parties were married for 18 years and the wife was ordered to pay the husband spousal support in the amount of $3,200 per month. The husband received an equalization payment, including a lump sum amount from the wife’s federal government pension of approximately $217,000. When the wife subsequently retired, she sought a variation in the spousal support amount, given the change in her income.
[153] In Senek v. Senek, 2014 MBCA 67, 46 R.F.L. (7th), the Manitoba Court of Appeal ruled that, despite a material change in circumstance where the husband had recently retired, the wife was entitled to “double-dip” and receive spousal support from her husband’s pension simply on the basis of necessity.
[39] Ultimately Justice Doyle in Want v. Gauthier found that the exception was met on the following grounds:
[156] Based on the evidence, this case fits into an exception to the general rule of avoiding double dipping because:
- The wife continues to be in dire need of spousal support;
- She has economic hardship
- She is in poor health;
- She has limited income; and
- The husband has the ability to pay as he has other substantial income
[40] I have previously found that the basis of M.R.N.’s entitlement to spousal support is both compensatory and needs based. M.R.N. obtained employment as a reception at MNP LLP, starting December 21, 2023, which began as a three-month contract position with an annual salary of $45,000. On February 9, 2024, M.R.N. was offered a permanent position as an Administrative Assistant at MNP LLP in the Waterloo office. Her salary remains $45,000.
[41] I find that an economic hardship from the marriage or its breakdown persists in this case, entitling M.R.N. to double dip even if a portion of it will have to come from the equalized part of N.Z.N.’s CAF pension. I am persuaded that this case fits into an exception to the general rule of avoiding double dipping because M.R.N. continues to be in dire need of support, she has economic hardship, she struggles with her mental health and yet she has taken all active steps to achieve self-sufficiency, she has limited income, and N.Z.N. has the ability to pay as his income is substantial.
Should income be imputed to N.Z.N. from the Aerospace Medicine Position?
[42] As stated above, M.R.N. wants to impute $273,000 to N.Z.N. in 2024 arising from self-employment income that he could be and should be earning since he was offered the position of the CF Aerospace Medicine Position on April 26, 2024. The figure of self-employment income of $273,000 is based on the hourly rate offered to N.Z.N. of $210 for a full-time position for the months May to December 2024.
[43] N.Z.N. testified at trial that initially his ability to accept the position was delayed because of his security clearance. Once the security clearance came through, then N.Z.N. explained that the delay in his ability to accept the offer arose because of an “issue” with his medical licensing through the CPSO. Specifically, his evidence is that since he had been not working as a clinical doctor for 2 years, he had to complete a different form to renew his licence in such a way that obtaining the renewal of his licence has been problematic.
[44] M.R.N. takes the position that N.Z.N. purposefully did not sign a contract with Calian for this position in an effort to reduce his income for support purposes for this trial. M.R.N. is of the view that N.Z.N. did not want to start or accept this job while these proceedings are ongoing because he wants a lower income attributed to him.
The Law on Imputation of Income
[45] The courts have held that the principles that apply in determining whether to impute income are the same in both child support and spousal support cases. The CSG grant the court the discretion to impute income to a party in situations where the court is of the view that the income reported in a party’s tax returns is not an accurate reflection of what the party is or could be earning. The relevant section of the CSG is section 19. In M.R.N.’s case, N.Z.N. asks the court to rely on s.19(1)(a) which provides as follows:
- (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:
(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment 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;
[46] Regardless of the basis upon which income is imputed, the amount of income that the court imputes to a party is a matter of discretion. The only limitation on the discretion of the court in this regard is that there must be some basis in the evidence for the amount that the court has chosen to impute: Korwin v. Potworowski, 2007 ONCA 739.
[47] The question of onus with respect to imputation of income is an important one. In original proceedings, the onus is on the party requesting the court to impute income to establish the grounds for this request; Homsi v. Zaya, 2009 ONCA 322, additional reasons 2009 ONCA 457; Drygala v. Pauli (2002), 61 O.R. (3d) 711 (C.A.), additional reasons 167 O.A.C. 274, .
[48] The Ontario Court of Appeal has held that in determining whether to impute income on the basis that a party is intentionally underemployed or unemployed pursuant to s. 19(1)(a) of the CSG, it is not necessary to establish bad faith or an attempt to thwart support obligations. A parent is intentionally underemployed within the meaning of this section if they earn less than they are capable of earning having regard for all of the circumstances: Drygala. In determining whether to impute income on this basis, the court must consider what is reasonable in the circumstances. The factors that the court is required to consider include the age, education, experience, skills and health of the party, the party’s past earning history and the amount of income that the party could reasonably earn if they worked to capacity: Drygala; Lawson v. Lawson (2006), 81 O.R. (3d) 321; West v. West (2001), 18 R.F.L. (5th) 440 (Ont. S.C.).
Application of the Law to Facts
[49] Lt. Col. Erin Smith testified at this trial. She works for the CAF in the Environmental Communication Medicine Department. The relevant portion of her testimony can be summarized as follows:
a. In December 2023, a new position for an Aerospace physician at the CFEME was created because there was not a military person who could fill it. As a result, this new position was created for a civilian and Calian was contracted by the CAF to hire a candidate. b. Very few people have the kind of niche training necessary to fill such a role. c. There were 3 applicants who applied for the position posted in December 2023. d. N.Z.N. was identified as the preferred candidate for the position. e. The position is listed as a three-month contract position. The initial start date posted was January 15th, 2024. It was then moved to March 15th and then to April 1st, 2024. f. The initial hope was that N.Z.N. would begin in this position as of April 1 2024. However, there was a delay in the CAF receiving N.Z.N.’s security clearance. g. The contract for the Aerospace Medicine position is set to expire as of September 30, 2024. There is a possibility that the position could be reengaged if the position cannot be filled with a military person in the summer. h. In answer to whether there is a trained person in the CAF who could fill this Aerospace Medicine position, she testified that there is one person in the military who is qualified but that individual is not posted in Toronto but, in Winnipeg, and if that remains the case, then Calian will be able to fill the position with a civilian past September 30, 2024. However, there are no guarantees that this position will be renewed after September 30, 2024.
[50] Megan Prikker, the Talent Acquisition Team lead for Health Services at Calian, testified at trial. Ms. Prikker explained that Calian has a contract with the CAF as the health care provider when the CAF needs civilian health care support across Canada. Ms. Prikker testified as follows:
a. There was an Aerospace Medicine Position for a civilian at the CAF and N.Z.N. was identified as the preferred candidate. One of the position requirements is that the candidate have 125 hours of Aerospace Medicine experience in the last 5 years. b. N.Z.N.’s security clearance was approved on April 26, 2024; c. On April 26, 2024, Calian made an offer to N.Z.N. for a contract position for a Physician Specialist – Aerospace Medicine at the CFEME, for 37.5 hours per week from Mondays to Fridays (7:30 a.m. to 4:00 p.m.), with a start date as soon as possible, pending contract signatures, at an hourly rate of $210. The end date of the contract is September 30, 2024. N.Z.N., if he accepted the offer, would be a self-employed contractor, paid through Calian. d. N.Z.N. responded to her on May 1, 2024 advising that his landlord had told him the prior week that he was selling the house that N.Z.N. is renting and, as a result, he is busy with securing a new place to love and move. In this email, N.Z.N. asked for accommodations because of his chronic back pain, including an adjustable standing desk and whether any work can be done remotely. He did not set a start date. e. On May 7, 2024, Ms. Prikker sent an email to N.Z.N. confirming that the CFEME responded that there is a standing desk available to N.Z.N. and that a portion of the work could be not remotely but that formal arrangements would need to be discussed. Ms. Prikker asked N.Z.N. to confirm a start date so the contract could be prepared for him. f. On May 14, 2024, Ms. Prikker sent a follow up email to N.Z.N. asking to nail down a start date because he had not responded to her email of May 7, 2024. She inquired as to whether he could start by the end of May and confirmed that without a start date, Calian could not prepare the contract. g. On May 15, 2024, N.Z.N. responded and advised that his CPSO Licence renewal was due before June 1, 2024 and that he wanted to confirm a few ambiguous things in the renewal form. He advised that he had contact the CMPA as well to obtain guidance on his responses to the renewal forms. Further, he explained that he should be moved into his new place before the end of May, that he had family court on June 5th and 6th, and suggested a start date of June 10th. h. On May 17, 2024, Ms. Prikker wrote to N.Z.N. advising that the clinic wants him to start on June 3, 2024, even if it just for a day, as there is a meeting they wanted him to attend and he could begin full time on June 10th, 2024. i. On May 17, 2024, later that date, Ms. Prikker wrote to N.Z.N. again, advising that the clinic has asked that he start part-time the last week of May, and to let her know ASAP so the contract could be prepared immediately. j. N.Z.N. did not respond to her emails of May 17, 2024. She left him a voicemail on May 22, 2024, asking him to follow up and confirm if he was able to adjust his start date. k. On May 30, 2024, she sent another email to N.Z.N. trying to confirm a parttime start date during the week of June 10, 2024. N.Z.N. responded to the email advising that due to what he considered to be a breach of trust and privacy by her sending Ms. Towlson correspondence between Calian and N.Z.N., he would correspond directly with Lt. Col. Erin Smith about this matter. N.Z.N. also stated that he would be seeking redress against her personally and against Calian, opining that Ms. Prikker’s conduct had been “inappropriate, clandestine and has had and will continue to have financial impacts” on him. l. She responded to Ms. Towlson pursuant to a Summons to Witness with which she was served on April 17, 2024. m. Prior to copying the correspondence between Calian and N.Z.N. to Ms. Towlson, Ms. Prikker sought advice from Calian’s legal counsel and was told how to respond.
[51] N.Z.N. testified as follows:
a. Even though the security clearance had come through and Calian wanted him to start working in May, 2024, he told Calian that he was being evicted because the owner is selling the house and he told Calian he needed another 30 days to move before he could start working; b. He did not sign the contract because he wanted certain accommodations including a standup desk and wanted to know if he could work remotely. c. He was trying to negotiate a better hourly rate because other people with lesser qualifications make more than $210 an hour. d. He submitted his licencing renewal with the CPSO on June 1, 2024. He called the Canadian Medical Protective Association (CMPA) to determine how to complete his licensing form since he had been out of clinical practice for 2 years. He was told he needed to check off that his physical and mental health could impact his ability to practice medicine. He was then required to complete a questionnaire, which he did and he is not waiting for the College to get back to him. As of the time of the trial, N.Z.N. testified that he does not yet have clearance for his medical licence and Calian is aware that there are issues with his licence renewal.
[52] I find that N.Z.N. did not disclose the offer he had received from Calian to M.R.N. when he received the offer of employment on April 26, 2024. His explanation was that he did not believe he had to disclose that he had an offer of employment to M.R.N. until he signed a contract. I find this explanation to be disingenuous.
[53] It was clear from N.Z.N.’s evidence that he did not want the Court to have the information regarding Calian’s offer of employment. When Ms. Prikker from Calian tried to communicate with N.Z.N. on May 30, 2024 to establish a start date, he refused to communicate with her directly and told her that he would seek redress against her personally because Calian responded to correspondence from M.R.N.’s lawyer. N.Z.N. testified that he told Ms. Prikker he required a further 30 days because of his move, yet his emails are clear he did not give her a start date or mention 30 days. When Ms. Prikker was emailing him advising that the clinic wanted to move up the start date so he could start part-time, N.Z.N. avoided responding and then deflected by blaming Ms. Prikker for complying with a Summons to Witness. There is no explanation by N.Z.N. that justifies his delay in pushing back the start date, other than the fact that he did not want to have a signed contract when this trial was proceeding. Despite N.Z.N.’s testimony about his licence renewal problems with the CPSO, he did not tender any evidence about his licence renewal form. The CPSO website confirms N.Z.N.’s licence was active with no issue; his requests for accommodation were responded to in a timely manner by the CAF, and at no time did N.Z.N. communicate with Calian that he was not in a position to accept the position.
[54] I find, therefore, that N.Z.N. was given an offer from Calian for this position, he was able to accept the offer and sign his contract, and he did not do so.
[55] Based on the above, I am exercising my discretion to impute N.Z.N. with the income he could and should be earning from the Calian offer of employment. It is reasonable on these facts to conclude that given N.Z.N.’s niche training, the Calian position fits his qualifications and is a position he would otherwise be jumping at the chance to take, if this family matter were behind him. I therefore impute N.Z.N. with self-employed income from Calian he could have accepted but did not do so prior to this trial resuming.
[56] Since we know that N.Z.N. did not start the position in May 2024 and the contract itself is stated to end September 30, 2024, the court is being asked to impute him with 8 months worth of income, when only 4 months is certain, based on the contract. However, N.Z.N. could have started the contract in May and chose not to. As a result, in these circumstances, I find that it is reasonable to impute N.Z.N. with 5 months of self-employment income from Calian in 2024 which would amount to $170,625, instead of $273,000. This would reduce the 2024 income for N.Z.N. to $420,033.
[57] Using an income for M.R.N. of $45,000 and an income for N.Z.N. of $420,033, the child support N.Z.N. is obliged to pay under the Child Support Guideline Tables is $5,317 a month.
[58] By way of a summary of my findings of N.Z.N.’s income for 2022, 2023 and 2024,
a. In 2022, I find that N.Z.N.’s income for support purposes was $449,003. b. In 2023, I find that N.Z.N.’s income for support purposes was $391,726; and c. In 2024, I find that N.Z.N.’s income for support purposes is $420,033, subject to readjustment.
[59] I find that N.Z.N. overpaid child support to M.R.N. by way of periodic payments in the total sum of $41,223.86 up to and including July 31, 2024. The below chart sets out N.Z.N.’s annual income from 2019 to July 31, 2024, inclusive; the amount owing by him under the CSG and confirms that N.Z.N. overpaid child support. It is M.R.N’s position that this overpayment should be applied to spousal support owing N.Z.N. in each year. I agree with this position, which is further reflected in the spousal support section of this judgment below.
| Year | Income | CSG Table amount N should have paid | What was paid | Owing/Overpayment |
|---|---|---|---|---|
| 2019 | $366,421 | $4,674/mo. (Aug – Dec) = $23,270 | Nil | $23,270 Owing |
| 2020 | $327,952 | $4,212/mo. X 12 months = $50,544 | $54,504 | ($3,960) Applied to SS |
| 2021 | $404,290 | $5,218/mo. X 12 months = $61,536 | $72,059.86 | ($10,523.86) Applied to SS |
| 2022 | $449,003 | $5,665/mo. X 12 months = $67,980 | $92,630.00 | ($24,650) Applied to SS |
| 2023 | $391,726 | $4,978/mo. X 12 months = $59,736 | $86,340.00 | ($26,604) Applied to SS |
| 2024 | $420,033 | $5,317/mo. X 7 months (Jan – July) = $37,219 | $35,975.00 | $1,244 owing |
| TOTAL | $300,285.00 | $341,508.86 | ($41,223.86) |
Issue Two: What is N.Z.N.’s retroactive spousal support obligation from May 1, 2022 to and including July 1, 2024?
[60] The issue of spousal support is inextricably linked with the amount of child support payable by a payor spouse, as child support liability has an impact on a payor’s ability to pay spousal support.
[61] I have used N.Z.N.’s income in each of 2022, 2023 and 2024 as calculated above, with 100% of his pension income, for the purposes of these calculations. I turn first to the results of the SSAG calculations. The SSAG ranges of spousal support in each calendar year is as follows:
a. For 2022, the mid-range is $10,045 a month and the high-range of the SSAGs is $11,192 a month, based on N.Z.N.’s annual income of $449,003, and M.R.N.’s income of $0. b. For 2023, the mid-range is $8,588 a month and the high-range of the SSAGs is $9,544 a month, based on N.Z.N.’s annual income of $391,726 and M.R.N.’s income of $26,604. c. For 2024, the mid-range is $7,068 and the high-range of the SSAGs is $8,231 a month, based on N.Z.N.’s annual income of $420,033 and M.R.N.’s income of $45,000 from MNP.
[62] In line with my January 3, 2024 decision, in light of M.R.N.’s strong compensatory claim, I find that the mid-point between the mid-range and the high-range of the SSAGs is appropriate in terms of setting the quantum of M.R.N.’s spousal support entitlement.
[63] Further, in line with my January 3, 2024 decision, the income tax considerations should be based on the after-tax benefit M.R.N. would have received in each calendar year at her tax rate.
[64] I have calculated the after-tax amount N.Z.N. owes M.R.N. in retroactive spousal support in the below chart. M.R.N. argues that any overpayment N.Z.N. made in child support as reflected in the chart at para. 59 above should be applied to his spousal support obligations in each year of overpayment. I agree that it is appropriate to apply the overpayment of child support toward the spousal support arrears:
| Year | N.Z.N.’s income | Mid-point between the mid-range and high-range of SSAGs | Overpayment of CS to be credited to SS | Support owing | After-tax cost/after-tax benefit midpoint |
|---|---|---|---|---|---|
| 2019 | $366,420.97 | MR $9,3450 HR $10,364 Mid-point $9,857 x 5 months = $49,295 | Nil | $49,285 | N’s after-tax cost $22,970 M’s after-tax benefit $36,625 Midpoint $29,797.50 |
| 2020 | $327,952.40 | MR $8,407 HR $9,329 Midpoint $8,868 x 12 months = $106,416 | $3,960 | $102,456 ($106,416 - $3960 credit) | N’s after-tax cost $50,902 M’s after-tax benefit $81,879 Midpoint $66,390.50 |
| 2021 | $404,290 | MR $10,218 HR $11,356 Midpoint $10,787 x 12 months = $129,444 | $10,523.86 | $118,920.14 ($129,444 - $10,523.86 credit to SS) | N’s after-tax cost $61,824 M’s after-tax benefit $97,699 Midpoint $79,782 |
| 2022 | $449,003 | MR $10,045 HR $11,192 Midpoint $10,618.50 x 12 months = $127,422 | $24,650.00 | $102,772 ($127,422 - $24,650 credit to SS) | N’s after-tax cost $58,651 M’s after-tax benefit $93,836 Midpoint $76,243 |
| 2023 | $391,726 | MR $8,528 HR $9,544 Midpoint $9,036 x 12 months = $108,432 | $26,604.00 | $81,828 ($108,432 - $26,604 credit to SS) | N’s after-tax cost $49,914 M’s after-tax benefit $84,588 Midpoint $67,251 |
| 2024 | $420,003 | MR $7,068 HR $8,231 Mid-point $7,649.50 x 7 months = $53,546.50 | Nil | $53,546.50 | N’s after-tax cost $24,692 M’s after-tax benefit $34,671 Midpoint $29,682 |
| Total amount of spousal support owing by N.Z.N. after giving him credit for what he paid in SS and applying his overpayment in CS toward SS | 2019 - $36,625 2020 - $81,879 2021 -$97,284 2022 - $93,836 2023 - $84,588 2024 (7 months) - $34,671 TOTAL = $428,883 |
[65] Accordingly, up to and including July 31, 2024, N.Z.N. owes M.R.N. retroactive spousal support in the fixed sum of $428,883, which is an after-tax, net figure.
[66] Starting August 1, 2024 and on the first day of each following month, N.Z.N. shall pay M.R.N. spousal support in the sum of $7,649.50 a month, which is the mid-point between mid-range and the high-range of spousal support under the SSAGs, using an imputed annual income for N.Z.N. of $420,033 and an annual income of $45,000 for M.R.N..
Issues Three and Four: What is N.Z.N.’s child support obligation for the period starting August 1, 2024 and as of January 1, 2025?
[67] Using an income for M.R.N. of $45,000 and an income for N.Z.N. of $420,003, the child support N.Z.N. is obliged to pay under the Child Support Guideline Tables is $5,317 a month. I find that N.Z.N. should be paying child support in the sum of $5,317 a month for the two children of the marriage, starting August 1, 2024 and on the first day of each following month until further order of the court. This is subject to adjustment retroactive to January 1, 2024, if N.Z.N. earned more or less than the $420,003.
Issue Four: What is N.Z.N.’s spousal support obligation starting January 1, 2025?
[68] M.R.N. seeks an order that N.Z.N. pay her spousal support in the sum of $11,233 based on her estimate of his income for 2025 which she calculates to be $585,021 and her estimated income of $45,000.
[69] Specifically, for 2025, M.R.N. submits that N.Z.N.’s income should be set at $585,021, comprised of the following sources:
a. Veterans’ independence program grant of $1,760; b. CF pension including RCA of $149,968; c. Calian CFEME income of $409,500 d. Disability benefits, which are non taxable of $11,054.
[70] This calculation assumes that N.Z.N. will continue to have the Calian contract as an Aerospace Physician into 2025.
[71] I am not prepared to set an income for N.Z.N. for the period starting January 1, 2025 onward. There is no evidence before me that the Aerospace Physician position will be renewed past September 30, 2024, or if it is renewed that it will continue into 2025. As a result, I decline to exercise my discretion to impute a future income to N.Z.N. for support purposes.
[72] Instead, N.Z.N.’s income for 2024 will be the income on which he is to pay ongoing child and spousal support until a review of this matter takes place in May of 2025, when each party is to exchange income disclosure and income tax returns.
Issue Five: What sum, if any, does N.Z.N. owe M.R.N. on account of s.7 expense arrears?
[73] M.R.N. testified that N.Z.N. has not made any payments toward the children’s s.7 expenses despite my January 4, 2024 decision. She seeks an order that N.Z.N. pay her s.7 expense arrears in the sum of $8,449 for the period from the date of separation to July 2023, inclusive.
[74] I made this order in my January 3, 2024 decision, I found that Rockway tuition was a legitimate s.7 expense and ordered N.Z.N. to pay M.R.N. s.7 expenses arrears in this fixed sum of $8,449.
[75] M.R.N. is also seeking an order that N.Z.N. pay s.7 expense arrears of $7,177 for the period from August 2023 to July 2024, inclusive. This is on account of J.’s annual tuition plus textbooks, totalling $14,608.57, after reducing this cost by the tuition assistance subsidy M.R.N. received in 2023 and 2024. M.R.N. was out-of-pocket $10,018.57. Given my finding that this tuition is a legitimate s.7 expense, I find that N.Z.N. shall pay M.R.N. s.7 expense arrears for the period from August 2023 to July 31, 2024, inclusive.
[76] For any and all further s.7 expenses for the children, the parties shall share these expenses proportionately based on N.Z.N.’s 2024 income of $420,003 and M.R.N.’s 2024 income of $45,000, which is M.R.N. pays 10% of these expenses, and N.Z.N. pays 90% of any future expenses.
Issue Five: What is the equalization payment N.Z.N. owes M.R.N. and how should post-judgment interest be determined?
[77] M.R.N. seeks an equalization payment of $61,133.58 plus pre-judgment interest of 2% from the date of separation, August 7, 2019, onward. In the draft order M.R.N. put forward, it is stated that this is on the the consent of N.Z.N.
[78] This equalization payment does not include N.Z.N.’s pension which was dealt with separately.
[79] The Net Family Property (“NFP”) statement prepared by M.R.N. in February 2023, lists N.Z.N.’s NFP at $138,687.15; M.R.N.’s NFP at $16,300; resulting in N.Z.N. owing M.R.N. an EP of $61,133.58.
[80] This NFP statement, however, was based on an older financial statement sworn by M.R.N..
[81] The most updated financial statement sworn by M.R.N., dated March 15, 2024 lists her assets on V-date totalling $26,006.35; no debts on V-date; date of marriage deductions of $17,000; with no excluded property. According to this updated financial statement, sworn on March 15, 2024, M.R.N.’s NFP on the date of separation totalled $27,506.35.
[82] Using N.Z.N.’s NFP from M.R.N.’s prior NFP statement of $138,687.15, M.R.N.’s NFP of $27,506.35, would result in N.Z.N. owing M.R.N. an EP of $55,590.40, and not $61,133.58, as M.R.N. seeks.
[83] Accordingly, based on this updated financial information, I order N.Z.N. to pay M.R.N. an EP of $55,590.40, as opposed to an EP of $61,133.58, plus pre-judgment interest from the date of separation at 2% to the date of this order.
Disposition and Order
[84] This court makes the following order:
a. Pursuant to s.15.1(1) and (3) of the Divorce Act, the applicant shall pay the respondent section 7 expense arrears in the fixed sum of $7,177 for the period from August 2023 to July 31, 2024; b. As of June 30, 2024, there are no arrears of guideline monthly child support owing by the applicant to the respondent for the children, J.M.N., born March 13, 2008 and O.Q.N., born February 8, 2012. c. Pursuant to s.15.2(1) and (3) of the Divorce Act, the applicant shall pay the respondent spousal support arrears fixed in the sum of $428,883 for the period from the date of separation to and including July 31, 2024. d. Pursuant to s.15.2 of the Divorce Act, commencing August 1, 2024 and on the first day of each following month, the applicant shall pay the respondent, spousal support in the sum of $7,649.50 a month, which is the mid-point between the mid-range and the high-range of spousal support under the Spousal Support Advisory Guidelines, using an income for the applicant of $420,033 and an income for the respondent of $45,000 a year. e. Pursuant to s.15.1(1) of the Divorce Act, commencing August 1, 2024, and on the first day of each following month, the applicant shall pay the respondent child support for the children, J., born March 13, 2008 and O., born February 8, 2012, in the sum of $5,317 a month, based on the applicant’s estimated income of $420,033 in 2024. f. Starting August 1, 2024, the parties shall proportionately share the children’s out of pocket section 7 expenses with the applicant paying 90% and the respondent paying 10% based on the applicant’s imputed income for 2024 of $420,033 and the respondent’s estimated income for 2024 of $45,000. g. Pursuant to Part I of the Family Law Act, the common law or otherwise, the applicant, N.Z.N., shall pay the respondent, M.R.N., an equalization payment of $55,590.40 plus pre-judgment interest from the date of separation at 2% to the date of this order. h. Both parties shall immediately notify the other in writing upon any change to their employment status, income, benefits or financial circumstances and shall provide written particulars of the change within 14 days of the change occurring. i. Pursuant to section 40.1 of the Garnishment Attachment and Pension Diversion Act up to 100% of the Applicant’s Canadian Forces Pension shall be garnished to pay his support arrears until paid in full. j. For so long as the Applicant, N.Z.N, owes support arrears to the Respondent, M.R.N., his entire income tax refund from Canada Revenue Agency shall be forthwith upon receipt transferred to M.R.N. until all arrears are paid in full. M.R.N. shall complete and submit a Statement of Arrears to the FRO indicating tax refund amounts received each time the same are received. k. Pursuant to s. 25(1) and (3) of the Federal Child Support Guidelines, the Applicant, N.Z.N., shall file his income tax returns on time each year, i.e., on or before April 30 of each year. l. Pursuant to s. 21(1) and s. 25(1) of the Federal Child Support Guidelines, the Applicant, N.Z.N., and the Respondent, M.R.N., shall exchange full and complete copies of their income tax returns with all schedules and attachments filed with Canada Revenue Agency by May 15 of each year, starting on May 15, 2024. In addition, both shall provide to the other full and complete copies of any Notices of Assessment and Notices of Reassessment received from Canada Revenue Agency forthwith upon receipt. m. Beginning on May 15th, 2025 and on every May 15th thereafter for as long as child support is payable for the children, the parties shall provide each with up-to-date income disclosure as required by s. 25(1) and (3) of the Federal Child Support Guidelines. The applicant’s child support obligation for 2024 shall be adjusted once his 2024 income is known and any overpayment or underpayment shall be calculated and paid by July 1st, 2025. n. Unless this order is withdrawn from the Director’s Office, at the Family Responsibility Office, it shall be enforced by the Director and amounts owing under the order shall be paid to the Director who shall pay them to the person to whom they are owed. o. This order bears post-judgment interest at the rate of 7% per year effective from the date of this order. Where there is a default in payment, the payment in default shall bear interest only from the date of default.
M. Kraft, J.
Released: July 19, 2024