The Ontario Court of Appeal recently allowed a wife’s appeal of a spousal support determination, finding that the trial judge had failed to impute additional income to the husband from housing properties he owned, which were worth $5 million.
Trial Judge Awards Spousal Support
The husband and wife were married in 2003. At the time of marriage, the wife was 42 and the husband was 66.
Prior to their marriage, they executed a marriage contract, which provided that, upon dissolution of the marriage, neither party would be entitled to the property of the other, and the wife waived any right to claim spousal support.
They filed for divorce in 2016. At the time of the trial, the wife was 57 and the husband was 80.
The trial judge determined that the marriage contract was valid and binding as it applied to the division of property. However, he found that the wife’s financial circumstances warranted some award of spousal support. He based his decision on the fact that the wife’s annual income stood at $15,564, while the husband declared annual income of $24,226. The trial judge accepted the husband’s income declaration despite the fact that he had several residential real estate holdings, worth almost $5 million at the time of trial.
The trial judge rejected the wife’s submission that he should impute additional income to the husband from the properties he owned, explaining:
“The [wife]’s income is $15,564 according to her financial disclosure submitted to the court. The [husband]’s income is declared at $24,226. The court heard evidence of rental income received from the rental [properties]. This issue was not fully explored by the [wife] in cross-examination of the [husband]. It leaves the court in a difficult position of determining the [husband]’s income. The court cannot speculate on what the precise income of the [husband] is in the absence of evidence received at trial. The court also cannot speculate as to the expenses of maintaining the realty taxes and mortgages on the subject properties.”
As a result, the trial judge ordered the husband to pay the wife a lump sum payment of $40,000. He also made a $25,738 costs award against the wife.
The wife appealed the decision, arguing that the trial judge erred by failing to invalidate the marriage contract in its entirety. She also appealed the quantum of the spousal support lump sum award.
Court of Appeal Orders New Trial to Determine Spousal Support
With regard to the wife’s first ground of appeal, the court upheld the trial judge’s finding that the marriage contract was valid overall.
The court then turned to the wife’s contention that the trial judge’s award of spousal support was inadequate.
Although the court noted that appellate courts should afford deference to the support orders made by trial judges, it found that the unique circumstances of the case required its intervention. The court stated:
“The trial judge’s dissatisfaction with the record before him was understandable. However, both parties must share the responsibility for this state of affairs. Although [the wife] had the onus of demonstrating why income should be imputed to [the husband], and in what amount, [the husband] was required to make proper disclosure of all sources of income, but failed to do so.”
The court then noted that under s. 19(1)(e) of the Federal Child Support Guidelines – which provide the starting point for determining income for spousal support purposes under the Spousal Support Guidelines – a court may impute income where the “spouse’s property is not reasonably utilized to generate income”. The court noted that while the imputation of income is discretionary, the facts of the case cried out for it to be considered. The court found that:
“In all of the circumstances, it was an error for the trial judge not to at least consider imputing additional income to [the husband]. After all, this was a fairly long marriage. [The wife] worked hard on the home-front – cooking, cleaning, doing laundry, and cleaning the [the husband]’s residential properties – while those properties increased significantly in value, to nearly $5 million at the time of trial.”
Additionally, the court noted that the husband wasover 80 years old and could generate significantly more income from his properties, beyond that included in his declared income of $24,226. In contrast, the wife had no real employment prospects and an annual income that appeared to be below the poverty line. Therefore, at the age of 60, she would be in need of support for many years to come.
As a result, the court allowed the appeal in part and remitted the case back to the Superior Court of Justice for a hearing on the imputation of income to the husband for the purposes of calculating the award of spousal support.
At Feigenbaum Law, our goal is to help you move forward following the breakdown of a relationship while retaining as much financial stability as possible and ensuring your children are provided for. Mark Feigenbaum is able to counsel his clients on all potential risks that may result from a family law dispute, not just those related strictly to the breakdown of a marriage. Contact Mark online or call him at (905) 695-1269 or toll-free at (877) 275-4792 to book a consultation.