Court Cases & Orders

Lifestyle Post-Separation: $200k Tesla, New Girlfriend, Lavish Trips, and Support Obligations

Written by Russell Alexander / (905) 655-6335

In a recent Ontario case, the court rejected a very wealthy husband’s complaints that his finances did now allow for significant child and spousal support pending divorce.  This was based partly on social media evidence of his extravagant jet-setting lifestyle in the company of a (very) young new girlfriend.

The couple met when the husband was the founder, president and CEO of a highly successful educational tech company.  The wife had been an assistant in the Human Resources department of another company.  They lived together for a while, then got married and had three children together.  In accord with what the wife said was the husband’s insistence (which he later denied), she stayed home to care for them since the husband promised he was financially able to provide “more than enough” for the family.

The marriage fell apart after only 7 years, and their divorce became contentious.  Among other things, the wife said their marriage contract was unenforceable since it had been signed under very high-pressure circumstances only five days before their planned wedding in Hawaii.

There was also significant uncertainty about the true state of the husband’s assets for child and spousal support purposes.  Although he had not yet given full financial disclosure, the husband was now worth at least $335 million – which he complained was actually a steep drop from about $519 million at the time of the marriage.  He also professed to be burdened by “crushing” debt and interest payments of about $20 million, with at least $8 million still owing to the Canada Revenue Agency.  This allegedly made him unable to pay temporary child and spousal support at the levels requested by the wife pending their divorce trial.

The matter turned contentious, and the wife applied for an order, which the court readily granted over the husband’s objections. In doing so, the court painted a picture of his lavish post-separation lifestyle:  A fancy new car, and globetrotting across three continents in the company of a young new girlfriend/part-time model. The court wrote:

In my view, the Respondent [husband] clearly has the ability to pay child and spousal support. … Without limiting the generality of the foregoing:

1. It was not disputed that, following the parties’ separation, the Respondent chose to purchase a high-end Tesla automobile at a cost of $200,000 or more, while thereafter allowing his new partner to drive the Audi A6 vehicle the Respondent had been using as his principal vehicle. Although the Respondent attempted to justify that decision on the basis of his view that the Tesla vehicle is a safer automobile, facilitating the corresponding availability of lower insurance premiums, I did not find such rationalizations of the unusual and extraordinarily high vehicle expenditure convincing. For present purposes, the purchase lends support to the Applicant’s contention that the Respondent’s post-separation spending has not been constrained by supposed concerns regarding his high level of debt.

2. The Applicant [wife] also tendered evidence, (including social media posts and photographs), indicating that the Respondent has travelled extensively following the parties’ separation; e.g., to destinations including Costa Rica, Newfoundland, Colombia, Bermuda, Boston, the Turks & Caicos, Montreal, the Netherlands, the United Kingdom, Australia, Hawaii (Maui) and Prince Edward Island. I think it fair to infer that some of those trips may have been business-related, (at least in part), in which case the corresponding cost of those particular trips may have been covered to some extent as legitimate business expenditures; e.g., insofar as it was not disputed that [the husband’s company] D2L has offices in locations that include Boston, the United Kingdom, Amsterdam and Australia. Having said that:

1. There is nothing to suggest that the aforesaid trips to Costa Rica, Newfoundland, Columbia, Bermuda, the Turks & Caicos, Montreal, Hawaii and Prince Edward Island were business-related, or anything other than recreational travel. …

2. The Applicant also indicated, (and it was not denied by the Respondent), that the Respondent customarily travels in a manner that is more expensive than many travellers; e.g., ensuring that he and the children flew “first class” during their travel to and from Newfoundland and Prince Edward Island, (with the trip to Newfoundland having cost at least $30,000), and securing “VIP” passes to a baseball game at Fenway Park while visiting Boston.

3. On most of the above trips, (including the aforesaid travel to seven other countries and three continents), the Respondent was accompanied by his new partner; i.e., a girlfriend said by the Applicant to be in her “early twenties”, and described by the Respondent himself as someone who is “still a student”, although she was also said to be “a part time model” and the operator of an unspecified “successful retail commerce business”. For present purposes, I nevertheless think it noteworthy that the Respondent, while emphasizing that his new partner “never asks [him] for money or anything lavish”, and has “many nice things” such as clothes and handbags because of her modelling work and business, did not deny or contradict the Applicant’s belief that such travel by the Respondent’s new partner was funded by the Respondent personally or by D2L, (which in turn would suggest the Respondent’s ability to run personal expenses through the corporation despite his denials), and that the Respondent’s new partner almost certainly would have flown “first class” along with the Respondent.

4. While the Respondent attempted to justify and downplay the apparent extravagance of some of this personal travel, (e.g., by indicating that he took a number of such trips “to deal with the stress of the divorce and life as a public CEO”, and took the parties’ children to Newfoundland and Prince Edward Island to “connect” with their roots, extended family and friends), in my view the relevant implication of such evidence is that the Respondent clearly has access to funds allowing him to engage in such discretionary travel with his children and his new partner.

The court also rejected the husband’s claims that the $184 million drop in his net worth over the 7-year marriage impacted his ability to pay temporary child and spousal support, writing:

More generally, I think it important to remember that, even if the Respondent’s net worth was “significantly reduced” over the course of the marriage from approximately $519 million at the date of marriage to approximately $335 million at the date of separation, (which was emphasized repeatedly during the course of submissions), the Respondent admittedly still had a net worth of $335 million just two years ago; i.e., at the time of the parties’ separation in May of 2021. There was nothing before me to indicate or suggest that such assets have been significantly dissipated or squandered in the wake of the parties’ separation, and I think it more likely that the Respondent’s financial position has been enhanced by D2L going public. More to the point, I find it difficult to believe or accept that a party possessed of anything approximating such levels of wealth is incapable of finding some means of financing and paying substantial child and spousal support. My impression in that regard is reinforced by the demonstrated reality, (as outlined above), that the Respondent apparently has no difficulty finding the means of paying for other significant discretionary expenditures when he thinks such expenditures are appropriate.

With that said, the support amounts had to be commensurate: Even though the husband’s 2021 tax return showed nearly $21 million in income, the court accepted this was an anomaly, since it reflected certain non-recurring transactions. It was unrealistic to award support on that basis since it would result in the husband paying excess amounts in what would be a liquidation and transfer of assets.

Instead, the court accepted the husband’s “true” income for that year was actually about $520,000. After making some adjustments to the calculation, it temporarily ordered him to pay child support of about $7200 per month, and monthly spousal support of about $9,000.

Full text of the decision: Baker v. Baker, 2023 ONSC 4082 (CanLII)

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About the author

Russell Alexander

Russell Alexander is the Founder & Senior Partner of Russell Alexander Collaborative Family Lawyers.