Child Support, Custody & Access Court Cases & Orders

Is Husband Only in Contempt of RRSP Non-Depletion Order if He Buys a Ferrari?

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Is Husband Only in Contempt of RRSP Non-Depletion Order if He Buys a Ferrari?

The wife and husband separated after having four children during eight years of marriage together.  They were divorced in 2012, but there had been extensive litigation in the years since, mainly revolving around the husband’s annual income (initially estimated by the court at $500,000) and his efforts to have his support obligations reduced.

The couple reached agreement on a much lower income amount and settled the husband’s spousal and child support obligations by way of two orders made on consent.  Both orders included an express non-depletion component:  it prohibited the husband from depleting his property and assets, as a means of thwarting his ability to pay the wife.

Meanwhile, after the husband was laid off from work, he started his own company, at which he claimed to earn only $13,000 a year.  He then let that company go dormant, and became an employee of his parents’ company where he earned $72,000 per year.

The wife then learned that the husband had recently withdrawn about $105,000 from his RRSP money.  He claimed to use the money to pay his legal fees, credit card bills, and living expenses, including “rent” to his parents totaling $12,000.  (Although the court was provided with evidence of a cheque in that amount being cashed, it declined to conclude that it was for the payment of rent).

The wife accused the husband of being in contempt of the two prior orders.  She noted that his timing was suspect:  He knew she was about to ask the court to award her $373,000 as a lump, to cover child and spousal support arrears as well as going-forward support.

The husband admitted that he knew he was not supposed to deplete his RRSP funds.   However, claimed to have a rather unique understanding of what a non-depletion order was, as the court explained:

The husband stated that he understood non-depletion to mean that he was not to pay anything that was not part of his normal day-to-day living expenses. He was not to “abscond with the money,” “be irresponsible,” “go to Cuba type of thing” or “you know, buy a Ferrari.” He stated that he believed he could pay legal bills, pay rent, and pay for living expenses. He said that [his lawyer] Mr. Kelly told him that “you gotta do what you gotta do.”

To this, the court started by saying that the legal advice the husband had received about the RRSP withdrawals was “less clear than it could have been about what constitutes depletion.”  It also found that – despite his protests to the contrary – the husband could meet his reasonable living expenses solely from the salary his parents were paying him.

As for the contempt elements, the law was clear there were three elements that had to be proven:

1) That the orders clearly and unequivocally stated what should/should not be done;

2) That the husband had actual knowledge of the orders; and

3) That the husband intentionally did the act(s) that breached the orders.

For these purposes, to “deplete” or “dissipate” means to reduce one’s assets in a manner that impairs or defeats a claim for support.  It did not require the actions be wasteful to foolish.

Here, all the elements were present.  The husband knew about both orders, which were clearly-worded and unequivocal.  He knew exactly what he was ordered not to deplete.  And yet he admitted to withdrawing RRSP funds on three occasions.

The court added:

  If [the husband] wished to withdraw funds to pay legal fees or other expenses, the appropriate course was for him to seek permission from the Court to do so, mot to repeatedly breach the orders.

The court did not hesitate to find the husband in contempt, but gave him the chance to purge that contempt finding by repaying almost $105,000 to the RRSP within a short deadline.  If he did not do so, then his pleadings in the matrimonial litigation with the wife would be struck out entirely.

For the full text of the decision, see:

Weber v. Merritt, 2018

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com