BACKGROUND:
The Appellant and Respondent were former spouses. Following a trial in the Family Court in 2025, the Appellant was ordered to pay the Respondent $967,931.08 for child and spousal support arrears, equalization, and costs. He was also ordered to make monthly child and spousal support payments of $13,418 and to pay 72% of all special and extraordinary expenses for the parties’ three children. These obligations were based on the trial judge’s finding that the Appellant, who owns a construction company, had an annual income of $421,364.
Several years earlier, the parties had sold their matrimonial home and two other jointly owned properties. The Respondent received approximately $455,721.56 as her share of the sale proceeds. The Appellant’s share of approximately $392,859.72 remained held in trust by their real estate lawyer pending the outcome of the trial.
During the trial, it emerged that the real estate lawyer, who was deceased, had failed to properly manage his trust accounts. As a result, there was a significant shortfall in the funds that were supposed to be held in trust for the parties, including the Appellant. The remaining trust funds were under the control of the Law Society of Ontario’s Compensation Fund. The Respondent acknowledged that the Appellant had been unable to obtain the remaining $375,859.72 of his share of the property sale proceeds, and it was unknown whether, or to what extent, he would ultimately receive compensation from the Compensation Fund.
The Appellant was self-represented at trial and argued that the missing trust funds should have been considered when determining his obligations to the Respondent. The trial judge did not take the shortfall into account and provided no reasons for declining to do so.
On appeal, the Appellant argued that the shortfall should have been considered in determining both his spousal support arrears and his equalization obligation. He also argued that the circumstances affected his ability to pay the amounts ordered.
ANALYSIS AND THE LAW:
Impact of Missing Trust Funds on Ability to Pay
The Court of Appeal accepted that the trial judge erred by failing to consider the loss of the trust account funds and the resulting impact on the Appellant’s ability to pay.
The Respondent conceded on appeal that the loss of the trust funds and the uncertainty regarding whether the Appellant would receive compensation from the Law Society of Ontario’s Compensation Fund were relevant circumstances that the trial judge should have considered. The Respondent also proposed a remedy that would reduce the Appellant’s support arrears by the current amount of the trust fund shortfall, while directing any compensation ultimately received from the Compensation Fund to the Respondent.
The Court of Appeal agreed that the trial judge’s failure to consider the impact of the missing trust funds constituted an error. However, the Court did not find that the error required a new trial. Instead, the Court determined that the error could be fully addressed by varying the final order.
Imputed Income and Spousal Support
The Appellant challenged the trial judge’s decision to impute annual income of $421,364 to him. He also challenged the calculation of his spousal support obligations.
The Court of Appeal found no reversible error in the trial judge’s decision to impute annual income of $421,364 going forward, to impute comparable amounts in previous years, and to reject the Appellant’s position that his annual income was only $117,500.
The Court confirmed that once income in excess of $350,000 is imputed, the Spousal Support Advisory Guidelines (“SSAG”) do not presumptively apply to the calculation of past and future spousal support. However, the trial judge retains considerable discretion in determining the appropriate quantum of spousal support.
The Court emphasized that decisions concerning the quantum of spousal support are entitled to substantial appellate deference. The trial judge had a range of permissible approaches available when determining the appropriate amount of support, including applying the results generated by the SSAG formula.
The Court of Appeal was also not persuaded that the trial judge had failed to properly consider the Appellant’s obligation to pay 72% of the parties’ special and extraordinary expenses when determining the appropriate quantum of spousal support.
Whether a New Trial Was Required
Although the Court found that the trial judge erred by failing to consider the impact of the lost trust funds on the Appellant’s ability to pay, it determined that the error could be remedied without ordering a new trial.
The Court was not satisfied that the Appellant had established any other errors that would justify setting aside the trial decision and ordering a new trial.
The Court therefore accepted the Respondent’s proposed remedy as sufficient to address the trial judge’s error.
CONCLUSION:
The Ontario Court of Appeal allowed the appeal in part. The Court found that the trial judge erred by failing to consider the significant loss of the Appellant’s share of the property sale proceeds, which had been held in trust, when assessing his ability to pay the amounts ordered.
The Court varied the final order by reducing the Appellant’s spousal support arrears from $325,543.91 to nil and reducing his child support arrears from $231,817 to $181,501.19. The order was also varied to direct the Law Society of Ontario’s Compensation Fund to pay any amounts that would otherwise have gone to the Appellant to the Respondent instead.
The Court declined to order a new trial, finding that the identified error was fully remedied by varying the existing order. In light of the divided success on the appeal, there was no order as to appeal costs.
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