Decisions of the Court of Appeal

[1]              This appeal arises from the trial of an application to review spousal and child support pursuant to the terms of a separation agreement. 

[2]              The parties had cohabited for 19 years and had been married for 18 years.  They separated in January 2005 and were divorced in September 2007.  On the date of separation, the appellant was 47 years old and the respondent was 43 years old. The parties have three children for whom the respondent has always assumed primary care-giving responsibility: Eric, born August 18, 1989; James, born July 7, 1991; and Sarah, born February 13, 1995.  

[3]              During the marriage the appellant was the primary bread-winner and the respondent was a stay-at-home wife and mother.  They enjoyed a very comfortable lifestyle with a large home, private school and summer camps for the children, regular vacations, a nanny and two cars.  The breakdown of the marriage was very difficult for the respondent who suffered an emotional setback and alcohol dependence after separation.  She has now returned to the workforce as a secretary and earns about $45,000 annually.  The appellant is a self-employed real estate broker dealing in commercial real estate and also derives income from a variety of other corporate business ventures.

[4]              The separation agreement, dated June 15, 2006, provided that the appellant was to pay undifferentiated child and spousal support of $10,000 per month for 24 months, to be reviewed de novo after the 24-month period.  The agreement further provided that the amount of support was based on the needs of the respondent and the children rather than on the appellant’s “total declared income”, which was stated to be $69,377.21.  The term “declared income” was not defined but it clearly did not include all of the appellant’s disposable income.  

[5]              The $10,000 monthly support order included all extraordinary expenses.  However, a fund was established from the net proceeds of the parties’ former matrimonial home for the children’s private school expenses and the appellant maintained an RESP account with approximately $66,000 for post-secondary education expenses.  The matrimonial home sold for $1,564,100 and the net proceeds were equally divided between the parties.  In addition, both parties waived any claim to equalization payment.

[6]              The appellant initiated the review process on March 15, 2008 and after three unsuccessful attempts at mediation, the matter was set down for trial.  

SUPERIOR COURT DECISION

[7]              The trial judge found that the appellant had misled the respondent with respect to his income at the time the separation agreement was concluded and that the appellant had failed to make adequate disclosure of his income and resources in relation to the review.  Without making any finding as to the appellant’s actual or imputed income, the trial judge adopted what he described as the compromise proposed by the respondent: namely, that the appellant continue to pay spousal and child support in the total amount specified in the separation agreement, to be allocated at $2,000 for child support and $8,000 for spousal support.  The only significant adjustment from the separation agreement was that the respondent would now pay tax on the spousal support and the appellant could claim a deduction.  The trial judge further ordered that the s. 7 expenses for the children be shared on a 50-50 basis.  Finally, the trial judge awarded the respondent arrears of spousal and child support, s. 7 expenses of $76,084.20 and costs of $52,369.90.

ISSUES ON APPEAL

[8]              The appellant submits that the trial judge failed to provide sufficient reasons explaining how he determined the appropriate level of support.   Without making any finding with respect to the appellant’s income, the appellant argues, it was not open to the trial judge to make the support order.  The appellant further submits that the trial judge erred by failing to appreciate that spousal and child support were to be determined de novo rather than on the basis of changed circumstances.  The appellant asks for an order terminating spousal support effective July 1, 2008 or, in the alternative, a reduction in the quantum of spousal support.  The appellant also seeks leave to appeal the trial judge's award of costs.

ANALYSIS

[9]              We agree with the appellant that the trial judge’s reasons for judgment are deficient.  The reasons fail to explain to the parties and to this court a proper basis for the support orders.  The gap between the low award of $2000 for child support and the generous award of $8000 for spousal support is difficult to justify or understand.  The trial judge made only general findings in relation to the appellant’s income and the reasons do not demonstrate that the trial judge approached the case as a de novo review rather than as a case of changed circumstances.  His reasons fail to specify the income of the appellant. They also fail to provide any justification for departing from the Child  Support Guidelines, O. Reg. 391/97, or for declining to consider the Spousal Support Advisory Guidelines (Ottawa: Dept. of Justice, 2008).  The reasons fail to provide an appropriate reasoned basis that will serve the needs of the parties in the future as the children become adults and in the event the parties’ circumstances change.  The trial judge expressed strong disapproval of the appellant’s conduct during the trial and was clearly frustrated by what he regarded as the appellant’s inadequate financial disclosure.  However, that conduct and those findings do not excuse the trial judge’s failure to provide a properly reasoned legal basis for the award he made.

[10]         This leaves us with a difficult choice: should we order a new trial or should we decide the appropriate level of child and spousal support?  The parties have indicated a preference that we not order a new trial.  After giving the matter careful consideration, we have concluded that it is in the best interest of justice to make the best of the record that is before us and to determine the appropriate levels of support, thereby avoiding the cost and inconvenience of another trial.

[11]         The trial judge found that the income the appellant had disclosed on Exhibit 7, prepared by or on behalf of the appellant, was “more than adequate” to support the compromise proposed by the respondent.  While Exhibit 7 failed to provide the most current information as to the husband’s income, it does provide a basis for concluding that his average income from all sources between the years 2003 and 2008 was in the range of $230,000 annually.

[12]         The trial judge held that he could have imputed a substantial income above the amount disclosed on Exhibit 7, due to the appellant's failure to maintain the level of income he was capable of earning and due to the appellant's failure to make proper disclosure.  In our view, the record supports the trial judge’s conclusion that the appellant’s income exceeds that revealed by Exhibit 7.  There is evidence that the appellant derived income from a variety of business ventures.  In the light of the appellant’s failure to make full disclosure of his income and other resources, it is appropriate to attribute to him an income above that which was disclosed on Exhibit 7, namely $250,000 annually.

[13]         We do not agree that the respondent’s “compromise”, accepted by the trial judge, provides a proper foundation for the award, as it overvalues spousal support and undervalues child support without any reason or explanation.

[14]         In our view, this case is particularly well-suited for application of the Child Support Guidelines and the Spousal Support Advisory Guidelines.  Based upon incomes of $250,000 for the appellant and $45,000 for the respondent, the Child Support Guidelines produce a monthly payment by the appellant to the respondent of $4071. The Spousal Support Advisory Guidelines yield the following range: Low - $3349; Mid - $3968; and High - $4597.

[15]         We see no reason not to award the Child Support Guidelines amount of $4071 per month for child support payable on the first of the month.  In view of the appellant’s failure to make fair disclosure of his resources, we award spousal support at the high end of the range produced by the Spousal Support Advisory Guidelines, at $4597 per month payable on the first of the month.

[16]         As this was a long-term marriage during which the respondent assumed full-time housekeeping and child-rearing responsibilities, she is entitled to long-term support to reflect her lost or diminished earning capacity.  We reject the contention that the court should impose a termination date.

[17]         Any expenses that qualify as special or extraordinary expenses are to be shared proportionally according to s.7 of the Child Support Guidelines.  As found by the trial judge, these include expenses for Sarah’s private school, post-secondary expenses for Eric and James, expenses for wisdom teeth removal, cell phones and laptops for the children, minor trips of a celebratory nature, automobile insurance and travel to and from school and work.  The respondent is to maintain and provide receipts for these expenses semi-annually.

[18]         In accordance with the terms of the separation agreement, the judgment should be retroactive to July 1, 2008.  The arrears of spousal and child support and s. 7 expenses should be adjusted to reflect the amounts awarded in these reasons.

[19]         In accordance with the obligation under subsection 24.1(1) of the Child Support Guidelines, the appellant must provide updated income information no later than 30 days after the anniversary of the date of this order in every year in which one of the children is still a child within the meaning of the Child Support Guidelines.

[20]         The appellant has not convinced us that there is any error in the trial judge’s costs award and accordingly leave to appeal costs is denied.

CONCLUSION

[21]         For these reasons, the appeal is allowed in part and the order of the trial judge is varied in accordance with these reasons.

[22]         The parties have agreed that costs of $15,000 should be awarded to the successful party on appeal.  While the amount of support has been somewhat reduced, the appellant achieved only partial success.  In our view, the appropriate order in the circumstances of this case is that the parties bear their own costs of the appeal.

“Robert J. Sharpe J.A.”

“Paul Rouleau J.A.”

“Karakatsanis J.A.”

RELEASED: March 10, 2011