The recent Ontario Court of Appeal decision in Jonas v Pacitto, 2020 ONCA 727 saw the court questioning whether to impute income on the husband, despite the presence of a marriage contract precluding any spousal support.
The parties married in 2003 and subsequently divorced 13 years later in 2016. The husband had acquired a number of properties during a prior marriage, one of which he rented to the woman who would be his second wife. The parties struck up a relationship and drafted a cohabitation agreement that waived any entitlement to each other’s property owned before or purchased during their cohabitation. After they married, a marriage contract was created again disentitling either party from the property of the other, and in addition, waiving the wife’s right to any spousal support.
By the time of the trial, the value of the husband’s properties had totaled approximately $5 million dollars.
The trial judge rejected the wife’s evidence, stating the marriage contract was signed prior to the marriage, after being translated and witnessed. The judge found the absence of formal legal advice would not automatically vitiate a marriage contract, as the wife understood what she was agreeing to and decided to sign anyways. The trial judge then applied Miglin v Miglin, concluding the circumstances did not give any reason to discount the agreement. He further concluded that the marriage contract was consistent with the objectives of the Divorce Act, with the husband wanting to protect the net wealth he had accumulated that was not the result of the efforts of the wife.
Despite the trial judge’s conclusion that the marriage contract was valid, he awarded the wife spousal support under s. 33(4) of the Family Law Act, citing her dire financial circumstances at the time of the trial. The trial judge refused to impute a higher income to the husband with respect to his other properties, citing a lack of evidence by the wife, and the court’s inability to speculate on the husband’s precise income given the lack of evidence. As a result, the trial judge awarded a lump sum spousal support order of $40,000 based on the financial information presented to him.
While the Ontario Court of Appeal upheld the trial judge’s ruling on the validity of the marriage contract, the court decided the circumstances warranted overturning the trial judge’s spousal support order. Both parties share the responsibility for the unsatisfactory evidence before the court. Even though the wife had the onus of demonstrating why income should be imputed on the husband, the husband failed to make proper disclosure of all his sources of income. Income may be imputed when the spouse’s property is not reasonably utilized to generate income, pursuant to section 19(1)(e) of the Federal Child Support Guidelines. The husband had the onus of providing complete information about his assets. The trial judge erred in not at least considering imputing additional income to the husband, as his properties increased significantly in value to approximately $5 million at the time of trial. In contrast, the wife had little employment prospects and an income below the poverty line. Hence, the court found it necessary to remit the case back to the Superior Court of Justice to impute income on the husband and calculate the proper amount for spousal support to the wife.
This case reveals the importance of providing complete financial disclosure of all of your assets, despite the presence of a valid marriage contract precluding any spousal support. Even if your spouse waived their right to support, if the court deems the circumstances demand support be given, a lack of disclosure can be sufficient to warrant a higher income be imputed for the calculation of support.
For more information, please call us at Feldstein Family Law Group P.C. or contact our firm online.