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The Finer Points on Court-Ordered Interim Support

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The Finer Points on Court-Ordered Interim Support

As regular readers of my Blog likely know, in cases of separation and divorce the entitlement to child or spousal support is governed mainly by Canadian federal law, and (to a lesser extent) by Ontario legislation. Those laws allow a court to make a final order that intends to fully address the estimated future needs of former spouses and children, taking into consideration the various factors that have been established as being relevant to assessing need.

As much as it would be ideal for a court to be able to make such an order immediately, from the moment the couple irrevocably separates, the reality is that the process leading to a formal divorce is lengthy and often costly, and that the parties’ needs and means remain pressing and immediate, yet may change over time.

For this reason, Canadian law empowers a court to make one or more temporary or “interim” orders for support, which are intended to address the support recipients’ needs on a shorter-term basis, pending the full resolution of the issues that arise from the dissolution of the couple’s relationship.

These temporary orders (which at one time were called “interlocutory”), are generally governed by the same considerations that affect a court’s decision-making on final orders: Child and spousal support rights/obligations arise from sections 15.1 and 15.2 of the Divorce Act, respectively, with additional guidance being given by the Spousal Support Advisory Guidelines and the federal Child Support Guidelines. For example, section 15.2 set out the specific factors that must be considered when making either an interim or final order, including:

• the length of time the spouses lived together;

• the functions each of them performed;

• any order, agreement or arrangement relating to the support of either of them.

The section also sets out in detail the various objectives that the court should strive to meet when making either a final or temporary award.

However – and despite the overall similarity in approach – courts have also recognized that the objectives of a final order versus an interim order are not identical, and that there are slight nuances in the assessment exercise. Plus, each case is different, and the court must balance the factors as the situation dictates.

For this reason, an Ontario case from a few years ago named Driscoll v. Driscoll remains helpful in formulating an approach to interim orders in particular, by providing an added list of governing principles. The court, citing a contemporary B.C. decision named Robles v. Kuhn, endorsed the following eight points:

(1) On applications for interim support the [support recipient’s] needs and the [support payor’s] ability to pay assume greater significance;

(2) An interim support order should be sufficient to allow the [recipient] to continue living at the same standard of living enjoyed prior to separation if the payor’s ability to pay warrants it;

(3) On interim support applications the court does not embark on an in-depth analysis of the parties’ circumstances which is better left to trial. The court achieves rough justice at best;

(4) The courts should not unduly emphasize any one of the statutory considerations above others;

(5) On interim applications the need to achieve economic self-sufficiency is often of less significance;

(6) Interim support should be ordered within the range suggested by the spousal support advisory guidelines unless exceptional circumstances indicate otherwise;

(7) Interim support should only be ordered where it can be said a prima facie case for entitlement has been made out; and

(8) Where there is a need to resolve contested issues of fact, especially those connected with a threshold issue, such as entitlement, it becomes less advisable to order interim support.

The court in Driscoll also emphasized that these principles are not exhaustive; rather they are intended to assist the court in providing a “contextual analysis”.

Do you have questions about your interim support rights or obligations? Contact us for some advice that is tailored to your unique situation

For the full text of the decision, see:

Driscoll v. Driscoll, 2009 CanLII 66373 (ON SC)

Robles v. Kuhn, 2009 BCSC 1163 (CanLII), [2009] B.C.J. No. 1699

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 www.RussellAlexander.com

Husband’s Wealthy Family Slipped Him Funds “As Needed” – Spousal Support Obligation Set Accordingly

slipped

Husband’s Wealthy Family Slipped Him Funds “As Needed” – Spousal Support Obligation Set Accordingly

The husband was a Canadian citizen and resident. In 2009 he met a woman in Iran while visiting family there, and they got married in that country a few months later. The husband then returned to Canada and sponsored the wife to join him.
As part of that sponsorship process, the husband agreed to support the wife for at least three years from the date that she officially became a permanent resident. As is customary for Canadian sponsors, he gave Citizenship and Immigration Canada an undertaking to provide the wife with food, clothing, shelter, and other personal and medical needs, and also promised that neither the sponsored wife nor her family will need to apply for social assistance. He committed to this undertaking irrespective of any changes in his life.

The wife joined the husband in Canada in late 2009. She had studied English, but had not become entirely proficient. Despite being trained as an optometrist in Iran, she had not qualified to work as one in Canada and never obtained a job in her field. She also did not have her own bank account here.

The husband and wife separated in 2011, and the wife applied for interim spousal support pending trial.

In response to that spousal support application, the husband claimed that he was a self-employed Pilot Examiner earning approximately $26,000 per year. However, there was evidence in the form of a letter to Citizenship and Immigration Canada from an employer called Lakeview Millworks – a company apparently owned by the husband’s brother – attesting to the fact that the husband had been employed there at a job earning $58,500 per year.

However the husband was the sole title-holder on a home that was listed for sale at a price of $949,000. He also was the registered owner of five vehicles (though he claimed to use only three of those personally). It was also clear that the husband came from a wealthy family; his parents resided in Canada for only about half the year, and travelled back and forth to Iran two or three times annually. There was clear evidence that they frequently slipped him some money when needed.

In summary about his banking practices, the court said:

In this case, where the Husband had a “primary chequing account” at the Bank of Montreal in his name alone, funded from deposits from other Bank of Montreal accounts in his name or from others, where he has deposed that he received his father’s assistance “as needed,” that his father “typically” pays the monthly mortgage payments on the matrimonial home and where it appears that the Husband also pays his credit card balances using funds from this account, where he qualified for a $600,000 mortgage, where he showed yearly expenses of $110,994.60 and claimed income of $29,418.96 per year in his financial statement of March 14, 2012, his asserted income level is in doubt.

In this case, there are copies of uncashed cheques in addition to the income he is claiming and a representation to the Government of Canada of earnings of $58,500.

I do not accept that the Husband’s means are as limited as he alleges.

In my view, there is ample evidence that spousal support should be calculated on an income of far more than $26,000 or $45,000 per year. It is clear from the Husband’s own affidavits that he “typically” received and expected to receive funds “as needed” to support his lifestyle from his family, a lifestyle and a source of means that he shared with his Wife during the marriage.

The court accordingly imputed an annual income of $200,000 to the husband. At that income level, the Spousal Support Advisory Guidelines would have dictated monthly spousal support in the range of $700 to $933. However, this amount was insufficient in the circumstances; the court was required to consider the means of both parties.

In that regard, the court pointed out that by sponsoring the wife and bringing her to Canada as a permanent resident, the husband had promised to help her become a Canadian citizen, and had provided an undertaking to provide for her until December of 2012. However – aside from a one-time payment of $5,000 which was prompted by a court order – the husband had not provided her with any funds for the past six months. The Guideline amount had to be increased to provide the wife with a reasonable standard of living, having regard to the parties’ respective means and to the standards they reasonably expected to enjoy together at the time she relocated to Canada, and that she had actually enjoyed during the time they lived together.

Taking into account all the circumstances, the court therefore ordered the husband to pay interim spousal support in a gross monthly amount that would leave the wife with $3,250 net.

Kkabbazy v. Esfahani (2012), 2012 ONSC 4591  http://canlii.ca/t/fsrdq

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 www.RussellAlexander.com.

Is $62,000 in Temporary Monthly Spousal Support Reasonable?

Is $62,000 in Temporary Monthly Spousal Support Reasonable?

In a recent Ontario decision called Blatherwick v. Blatherwick, the court had to consider whether a wife’s existing temporary spousal support – currently at $12,000 per month – should be increased by another $50,000 per month.

The couple had been married for 29 years and had three children in what was a traditional marriage. The husband had been a successful businessman, while the wife stayed at home to care for the children. After separating, they commenced the process of negotiating and untangling their financial affairs, which included an equalization payment of over $1 million to the wife (almost half of which had already been paid to her as an advance) and temporary spousal support payments by the husband to the wife of about $12,000 per month, pending final resolution of the issues at trial.

However, the wife brought an interim application to the court, asking for increased support. Although the husband acknowledged that the wife was entitled to some spousal support, he did not agree with the amount she was seeking – namely $62,000 per month instead of the $12,000 per month he was currently paying.

The wife had arrived at this spousal support figure based on the assertion that (according to her expert) the husband was likely earning an estimated $1.5 million per year in income. This estimate was necessary because the husband had not been particularly forthcoming on the actual figures: Indeed, he had not only been evasive, but by his own admission he had submitted various conflicting and inaccurate income figures to the court, to Canada Revenue Agency, and to Citizenship and Immigration Canada. On this aspect, the motions judge observed:

In order for Mr. Blatherwick’s position to be upheld at trial, not only will he have to be believed but his various business partners will also have to be believed. Given his credibility as conceded above, I need not set out the litany of inconsistencies and dubious documentation proffered by both he and his business partners. This must be left to the enjoyment of the trial judge.

The motions judge then turned to the merits. First of all, the judge observed that although the Spousal Support Advisory Guidelines do not apply once a paying spouse’s annual income exceeds the $350,000 mark, this does not mean that there is a “cap” on the amount of spousal support that can be awarded once that income level is reached. Rather, the Guidelines provide a range of spousal support for the court to consider, depending the parties’ circumstances, need, and ability to pay.

The judge also pointed out that in considering temporary spousal support applications, there is a presumption that the separated spouses should enjoy an equal standard of living and should enjoy a similar lifestyle pending the final resolution of their issues.

Here, the proceedings were in an early stage and the motions judge had to consider the factual evidence as was currently available. After looking at all the facts (and after making further comment on the husband’s “admitted lack of credibility”) the judge imputed to the husband an annual income of $463,000, and increased the wife’s temporary spousal support so that she would receive $20,000 per month. In doing so, the judge observed that the wife “can clearly make ends meet on this amount.”

For the full text of the decision, see:

Blatherwick v. Blatherwick, 2012 ONSC 3606  http://canlii.ca/t/frsxd

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 www.RussellAlexander.com.

Spousal Support Guidelines – How Do They Affect You?

Spousal Support Guidelines – How Do They Affect You?

In July of 2008, the Canadian federal government launched the Spousal Support Advisory Guidelines, which are non-mandatory formula-based guides to the appropriate amount of spousal support that is merited in various domestic circumstances existing between separating and divorcing spouses. The use of these Guidelines – while still optional – was endorsed by the Ontario Court of Appeal in 2008.

So, what do separating and divorcing spouses in Ontario need to know about them?

• The Guidelines are a good starting point. As mentioned above, the Guidelines remain an optional tool for use by separating couples, their lawyers and (where the matter goes to court) by judges. But they are especially useful for encouraging parties to avoid litigation, as they provide a good starting-point for discussion and negotiation. And while they are routinely used by courts hearing spousal support disputes, judges are still entitled to deviate from the stipulated amounts where circumstances warrant.

• The Guidelines address different permutations. The Guidelines have been drafted to accommodate a wide range of living and custodial arrangements; for example its formula can take into account whether the spouses have children or not, and if they do, whether the paying spouse has custody of them and/or is paying child support for them. It can also makes allowances for situations involving shared custody, adult children, children with special needs, and step-parent situations.

• The Guidelines are predictable. Essentially, the Guidelines outline various policy considerations that form the underpinnings of how support is awarded in Canada, and then allow for specific values to be reached using actual financial information (such as each spouse’s income). These values are essentially “plugged in” to a formula, with the result that a range of spouse support amounts are generated.

• They Guidelines are still flexible. Not only are the Guidelines optional, but they also incorporate built-in flexibility in the form of “ranges” of support for each given scenario. This means that the interested parties or the courts can set support amounts at the upper or lower end of the range, as the circumstances dictate. Also, the support might be time-limited, or may be adjusted at negotiation time to reflect a significant post-separation increase in income by either spouse.

• There are exceptions. The Child Support Advisory Guidelines specifically include and descript certain defined exceptions. For example, they can take into account any prior support being paid, i.e. where paying spouse is already paying support in connection with an earlier marriage.

Overall, the Spousal Support Advisory Guidelines have certainly been a welcome addition to the Ontario family law system, in that they introduce the certainty of a near-formulaic approach to the process of determining spousal support obligations. However, this does not mean they are the definitive answer to every situation; getting solid legal advice is still a necessary part of the process.

For a link to the Spousal Support Advisory Guidelines in PDF form, see:

http://www.justice.gc.ca/eng/pi/fcy-fea/spo-epo/g-ld/spag/index.html

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 www.RussellAlexander.com.

 

Spousal Support – Advisory Guidelines and Disclosure Obligations

groom and bride hands form heart shape on wedding dress midriff

Spousal Support Advisory Guidelines and Disclosure Obligations

Whenever spouses separate, the often-long process of untangling their financial affairs begins.  Questions frequently arise as to the nature and scope of the financial disclosure that needs to be made as part of that process.   Although I have written previously about the scope and extent of this disclosure in Ontario, it’s important to put it into the context of how it relates to a court’s calculation of any spousal support obligations between the parties.

Child Support Enactment

Historically, the various Ontario courts’ approaches to calculating the spousal support that was owed from one party to the other had been a bit erratic, in that there was no uniform methodology of formula to be applied.   But several years ago, both the federal and provincial governments enacted Child Support.

Using Advisory Guidelines To Calculate Support

Guidelines, which established a formulaic approach to the calculation of child support, based on several factors including the paying parent’s income level.  After it was introduced, courts began using the income determined for the purposes of calculating child support as the baseline income for spousal support awards as well.   This was followed by the introduction of the Spousal Support Advisory Guidelines which – although not compulsory in nature – added some structure to the process, and added a focus on the income of the respective parties as a starting-point for the calculation of the precise amount of support that should flow from one to the other.

Ontario Family Law Rules

Given that this income-based calculation remains the current state of the law in Ontario, the question of how each spouse’s respective bottom-line “income” is calculated remains a key factor in determining spousal support obligations.  It should be noted that the approach, guidelines and calculations used for the purposes of reporting income to the Canada Revenue Agency for income tax purposes is not that same as those used for determining support in Family Law. While each spouse may provide providing his or her tax return, but this is just a starting-point for what must be disclosed.

Enter the Ontario Family Law Rules.  These Rules impose a general framework for the exchange of financial information between separating spouses, requires each spouse to provide the other with (among other things) a Financial Statement in a regulated form, and mandates that there be full and frank disclosure by each party of their respective information.

The Family Law Rules also encourage early disclosure, and mandate that all documents that are within a party’s control – or which are available to a party at his or her request – are to be listed and produced.  A court may also order that an outside party to the litigation be questioned.

There are sanctions for non-disclosure as well:  A breach of a court order for disclosure may result in the court imposing various penalties against the offending party, including certain costs sanctions or having his or her pleadings struck.  (However, if a party fails to comply with a disclosure order he or she is given an opportunity to show that they exercised due diligence in trying to comply with the order).

Preparation of Financial Disclosure Statement

I have written more fully in previous blogs about the kind of information that goes into the preparation of each party’s Financial Statement, and the types of information and documents that must be provided.   Is she be noted that the Family Law Rules define the term “documents” to include “information, sound or images recorded by any method.”   This means that electronic documents – including e-mail correspondence – are also potentially covered and are subject to the obligation imposed on each party to preserve information.  Indeed, the court has certain penalties – all the way up a finding of contempt of court – that it may impose in situations where a party has intentionally destroyed evidence that pertain to a family law proceeding.

What Does The Court Look For in Disclosure?

The scope of disclosure is very broad; however, this does not mean that it is unlimited.  In particular, courts are on the lookout for situations where one party is conducting a “fishing expedition” in connection with the information held by the other party, usually as part of a litigation strategy.  Moreover, courts – by way of an overall mandate to deal with cases justly and proportionately to their importance and complexity – are also authorized to curb excessive disclosure on the parties’ part, since this can negatively affect the litigation by adding delay and increasing the costs of the proceedings.

How To: Calculate, Document and Present Income for Spousal Support

When taken together, the Spousal Support Advisory Guidelines provide a framework for calculating spousal support using each spouse’s income as a starting point, while the Family Law Rules provide a framework for putting forth the documentation used to calculate that income.  It is accordingly important for separating spouses to understand how these Guidelines and Rules work, and to get competent legal advice on what their obligations may be.

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  www.RussellAlexander.com

Daughters Named as Beneficiaries, But Widow’s Right to Million-Dollar Insurance Policy Proceeds Determined by Ontario Succession Law

Daughters Named as Beneficiaries, But Widow’s Right to Million-Dollar Insurance Policy Proceeds Determined by Ontario Succession Law

In Matthews v. Matthews Estate, the husband and wife – who had two daughters together – separated in 2006.   The separation and divorce was typical, and included the usual requests for relief including a divorce, child and spousal support, child custody, exclusive possession of the matrimonial home, and equalization of Net Family Property.  Over the next few years, the parties managed to settle and resolve most of these matters, with the exception of spousal support and equalization which still remained to be determined.

However, there were a few little twists in the story.  

The first is not unusual:   at the time of separation, the husband had a $1 million life insurance policy, and had named his two daughters and sister as beneficiaries.  The daughters were to share $900,000 of the policy proceeds upon the husband’s death, with his sister taking the remaining $100,000.

The second twist, however, was that the husband died in the summer of 2010, just after the trial on the remaining matrimonial had begun (in May), but before the judge had written up the reasons for judgment (in August).  It is important to note that just before the husband’s death, the court in the process of sorting out the parties’ matrimonial issues had made an order vesting the life insurance policy in the wife, designating her the sole beneficiary, and making her responsible for paying all the premiums, going forward.

The third twist is that the without the $1 million life insurance policy, the husband’s estate did not have enough money to satisfy the wife’s spousal support needs.    In fact, at the time of the husband’s death, the matrimonial home had not yet been sold, the husband’s estate was insolvent, and the question of spousal support entitlement and an equalization payment to the wife were still unresolved.

As a result – and despite the fact that the deceased husband had named the daughters and his sister as beneficiaries – the entitlement to the proceeds of the policy was still an issue; the wife was asking for these proceeds to be used in order to pay the support that she was entitled to, as a dependent widow under the Succession Law Reform Act.  (That legislation provides that where a deceased has not made adequate provision for the support of his or her dependants (whether by testamentary document or otherwise), the court may order that funds from the deceased’s estate be used for the dependant’s proper support).

As the court put it, after reviewing the history of the litigation and interaction between the various parties:

It soon became clear that the real contest between the parties was centred on the one million dollar insurance policy.  

The court reviewed the interplay between the beneficiaries’ rights under the policy and the law of dependant’s relief.  It concluded that the Succession Law Reform Act makes it clear that the proceeds of the husband’s life insurance policy can be treated as part of the deceased husband’s estate, and can be used to pay support to the dependant wife – notwithstanding the fact that the husband may have irrevocably designated the daughter and sisters as beneficiaries under the policy.   In other words, if the assets of the husband’s estate were insufficient to meet the husband’s obligations to support his wife as a dependant, then the court must look to his other assets – including the life insurance policy proceeds – which pass by right of survivorship or pass outside the will.     Moreover, in such cases the family litigation is converted into a claim under the Succession Law Reform Act.

However, the court added a caution for these kinds of cases:   Given that by virtue of the Act the proceeds of the husband’s life insurance policy (which is not normally part of a deceased’s estate) are nonetheless being brought into the estate, this will naturally affect the beneficiary daughters and sister detrimentally.  As such, care must be taken to ensure that the burden of any support order in favour of the wife is first borne by the traditional assets of the deceased’s husband’s estate, before any encroachment is made upon on the insurance proceeds.

(As a side note, the court also observed that Spousal Support Advisory Guidelines were not an appropriate tool for determining the spousal support obligations of the deceased husband.  Rather, there were to be determined pursuant to s. 62 of the Succession Law Reform Act, which sets out those circumstances that are to be considered in determining the amount and duration of spousal support.)

For the full text of the decision, see:

Matthews v. Matthews Estate (2012), 2012 ONSC 933  http://canlii.ca/t/fq4rd

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  www.RussellAlexander.com.

 

 

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