BACKGROUND
This was an application on the issues of equalization, spousal support, and occupation rent. The Applicant wife and the Respondent husband married in August 1984 and separated in October 2020. The wife asked the husband to leave the matrimonial home in October 2020 when she discovered that the husband was having an affair. The wife worked as a social worker, and the husband worked a lawyer. According to the wife, the parties had a traditional marriage whereby the husband earned significantly more income while the wife was the primary caregiver and managed the household. Further, the husband maintained control over the family’s finances. With respect to equalization, there were disputes about the valuation of the husband’s corporate interests and the treatment of an inheritance. The wife argued that she should receive an equalization payment of $1.6 million while the husband argued she should receive $400,000. There were several disagreements over the values provided in each party’s Net Family Property (NFP) statement, including the value of the husband’s corporate interests. With respect to the occupation rent claim of the husband, he was seeking $148,000 from the first month following the date of separation.
ISSUES
- What, if any, is the appropriate equalization payment owed by the husband to the wife?
- What, if any, is the appropriate quantum of spousal support owed by the husband to the wife?
- What, if any, is the appropriate occupation rent payment owed by the wife to the husband?
ANALYSIS
What, if any, is the appropriate equalization payment owed by the husband to the wife?
The parties agreed that the wife should receive an equalization payment, however, they disagreed on what that amount should be. The judge addressed every difference between the parties NFPs for which evidence of value was provided. The most notable discrepancies include treatment of the husband’s inheritance and the value of the husband’s corporate interests.
With respect to the inheritance, the husband’s mother passed away during the marriage. The husband received $283,000 from her estate and a further $436,000. When the husband received these inheritances, he did not put them into a separate bank account, rather, amounts from the estate were transferred into a joint Home Equity Line of Credit (HELOC). The husband made numerous real estate investments throughout the marriage including a property on Bathurst Street. The husband argued that his inheritance could be traced to this property, however, the court agreed with the applicant’s position that depositing the funds into the HELOC was the equivalent of paying down a joint debt. Therefore, the inheritance could no longer be traced and the exclusion was lost.
With respect to the husband’s corporate interests, he had an interest in three corporations. Two business valuators were hired (one by each party) to assess the values of the husband’s interest in the corporations. The evidence of the husband’s valuator was preferred by the court as, in the court’s view, it seemed more independent and impartial rather than aiming to reach a certain desired result as it viewed the evidence of the wife’s valuator.
What, if any, is the appropriate quantum of spousal support owed by the husband to the wife?
The experts who conducted business valuations also provided evidence on the husband’s income. The main sources of the discrepancies included whether the husband’s life insurance expense should have been included as a personal expense or whether it was a proper deduction, and whether the husband had the ability to access the corporate income from the three corporations. With respect to the income valuations, the court once again preferred the evidence of the husband’s valuator. One of the reasons was because the judge found that the wife’s expert was more defensive and unwilling to concede any point. The court accepted the husband’s position and found that his income was $890,000 in 2021, $1.1 million in 2022, and $790,000 in 2023.
The husband conceded that the wife was entitled to spousal support, however, only that her entitlement was based on non-compensatory grounds. The court considered the length of the marriage (36+ years), the fact that the wife took on much more family and household responsibilities in order to allow the husband to advance his law practice, and the fact that the parties’ finances were completely merged. The court found that the wife’s claim was both compensatory and non-compensatory. The husband originally commenced paying spousal support in October of 2021 in the amount of $9,900 per month which was a significant underpayment.
What, if any, is the appropriate occupation rent payment owed by the wife to the husband?
The court in Non Chlom v Green 2023 ONCA 692 outlined that factors considered in deciding whether to order occupation rent include the timing of the claim, the duration of the occupancy, the inability of the non-resident spouse to realize on their equity in the property, any reasonable credits to be set off against occupation rent, and any other competing claims in the litigation.
One of the main considerations of the court in deciding whether occupation rent should be ordered was the payment of support. As mentioned above, the husband only began paying spousal support in 2021 and was underpaying. He had paid no spousal support for approximately one year following the date of separation dispute acknowledging that the wife had not only an entitlement to support, but a need for it as well. Further, there was no evidence to justify why the husband failed to act swiftly when it came to claiming occupation rent. Nor was there evidence to support why he wanted or needed to sell the matrimonial home or that the wife thwarted his attempts to do so.
CONCLUSION
Ultimately, the court did not calculate what the equalization payment should have been, rather, the equalization payment was left to the parties to resolve based on the court’s decision with respect to each value.
On the issue of spousal support, in considering the appropriate quantum, the court noted that the wife would receive a sizeable equalization payment, and that the parties agreed that the husband had paid already $613,000 in spousal support arrears. Spousal support was fixed at $16,000 per month from November to December of 2020 and $25,000 per month from January 1, 2021, and ongoing. It was left for the parties to calculate the outstanding amount based on those figures.
With respect to occupation rent, the court did not order occupation rent in favour of the husband.
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