The Overlap Between Spousal Support and Equalization
Berta v Berta, 2014 ONSC 3919
This case addresses the issues of spousal support, equalization and the overlap between the two claims.
The parties were married on December 31, 1982 and separated on March 26, 2010. The wife, Delia Joan Berta was 75 years old and the husband, Raymond Louis Berta was 68 years old and in poor health at the time of the proceeding. Joan held senior management positions until she took early retirement and then worked in different positions. Raymond started ACCE Inc., shares of which were equally owned by the parties. The parties lived a lavish lifestyle, which was funded by ACCE Inc., thereby increasing the corporation’s debts. After separation, Raymond purchased Joan’s interest in ACCE Inc.
The decision of the Court largely addresses the issue of income and support, as it quickly dispenses with the issue of equalization. The Court found that the “difference between the net family property of Ms. Berta and that of Mr. Berta is $123,060.23” (paragraph 34). As such, the Court ordered that “There shall be an equalization payment owing from Ms. Berta to Mr. Berta in the amount of $61,530.12” (paragraph 35).
The Court continues its analysis by considering the evidence presented by both parties with respect to the income earned by Mr. Berta. There was a large disparity between the two parties’ position with respect to Mr. Berta’s income. The Court found that Mr. Horsley, the expert witness for Ms. Berta, refused to cooperate and provide information to Mr. Berta and his expert witness regarding how he arrived at his calculations of Mr. Berta’s income for the past three years. Accordingly, after consideration of the evidence before the Court, the Court accepted the income proposed by the expert for Mr. Berta, and found Mr. Berta’s income to be in the amount of $620,472 for 2010, $717,789 for 2011, and $594,055 for 2012.
The Court then considered the issue of entitlement and quantum of spousal support. The Court held, “The factors and objective the court must consider in making an order of spousal support are outlined under subsections 15.2(4) and (6) of the Divorce Act” (paragraph 81). The Court then cited Bracklow which outlines “three conceptual bases for entitlement to spousal support: compensatory, contractual and non-compensatory” (paragraph 85).
“In order to assess the appropriate quantum of support, it is necessary to consider how the property division impacts the condition, means and other circumstances of the parties” (paragraph 88). Mr. Berta submitted that it would be unfair to allow Ms. Berta to receive her equal share of the company and “then claim that she is entitled to equally share in the income Ray is receiving as a result of his ownership and efforts in the same company she sold her interest in” (paragraph 90). The Court found that when determining spousal support, courts ought to examine the “payee spouse’s need, payor spouse’s ability to pay and, to some extent, the issue of double recovery” (paragraph 92).
The Court found that there might be an argument that Ms. Berta was paid her interest out of ACCE and that “value was determined on the basis of a calculation of what the maintainable earnings of that company would be over time and capitalizing that amount” (paragraph 97). However, the Court left this issue to be addressed another day as, in this case there “was no evidence of such calculations that may have been made in order to arrive at the value the parties agreed to when Ray bought Joan out of the company” (paragraph 97).
The Court found that Ms. Berta had been compensated fully for her early years of contribution. As such, the Court found that Ms. Berta was “not entitled to compensatory support” (paragraph 104).
After concluding that Ms. Berta was not entitled to compensatory support, the Court continued its analysis by considering whether Ms. Berta was entitled to non-compensatory support, also referred to as needs based support. “Needs must be assessed in the context of the lifestyle of the parties. This is especially so when the marriage is of long duration. This marriage lasted in excess of 20 years and the parties did enjoy a high standard of living” (paragraph 105). The Court, however, found that Ms. Berta had substantial assets and was deceptive about some of such assets throughout the dispute.
Despite the above, the Court continued its analysis by determining the income of the parties for support purposes. The Court determined Mr. Berta’s income to be $644,172 per annum and Ms. Berta’s income to be $484,356 per annum. As such, the Court ordered Mr. Berta to pay support to Ms. Berta in the amount of $5,380 per month, corresponding to the low end of the SSAG calculations.