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  • Writer's pictureJared Davies, Lawyer

Income imputation, lump sum spousal support, vesting orders and more pursuant to Levy v Williams

Background


Levy v Williams, 2023 ONSC 4164 is a recent Ontario Superior Court case heard by way of uncontested trial. This case has a lot of moving parts, including income analysis and income imputation, lump sum spousal support, carrying costs of the matrimonial home post-separation, vesting orders, costs award considerations and more.


In this case there were three children arising out of a 13-year marriage, although the third child was independent at the time of this proceeding. When the wife’s counsel sent a letter to the husband seeking to settle matters in 2018, the husband quit his job as a letter carrier (a position he held for 14 years). However, it is worth noting the husband had an appliance repair business as well. From there, an acrimonious litigious battle ensued. The husband’s pleadings were struck in 2022 due to “extensive, persistent, and willful” disclosure issues. The issues examined in this blog post are outlined next.


Issues


1. What is the husband’s income for support purposes?


2. What support should the wife be entitled to?


3. Should the husband be on the hook for joint expenses associated with the matrimonial home since separation?


4. What is the appropriate quantum for costs of the uncontested trial?


5. Should a vesting order be granted?


Analysis


1. Income analysis


While the wife’s income was transparent and straightforward, the husband’s income was not. The court noted, “…[the husband] has made a mystery of his income; not only for the Courts, but also for the CRA. He did not file an Income Tax Return in the five taxation years prior to the parties’ 2018 separation. Neither did he report any of his earnings as an appliance repair technician, perhaps, because it was his fulltime occupation during an extended medical leave from Canada Post.”


Considering the lack of disclosure, the court found it necessary to impute income to the husband. The court started with the imputation of the husband’s $60,000.00 salary working as a letter carrier because it was income available to him and he deliberately forfeited that position. Then the court considered his repair business. Again, without disclosure the court decided to impute income based off the available evidence:


[39] Having reviewed the available evidence, I impute fulltime annual income for the appliance repair business in the amount of $156,000. I believe this amount to also represent what was available to him when he had a Canada Post salary, and he ran his business after hours….


[40] In other words, I am satisfied by the evidence that [the husband's] income from full-time employment with Canada Post and after-hours self-employment income roughly equates to [the husband's] fulltime self-employment income and benefits as the owner of his own repair business. I find that amount to be $156,000.


In sum, the court found the husband’s income to be $156,000.00 for the purposes of support.


2. Spousal Support


In this case, the wife was entitled to spousal support on a compensatory basis due to the roles the spouses took during the marriage, namely, “[the wife] managed the home and children while [the husband] built up a successful business that provided him with the means to leave a stable employment position and begin a second family. She was out of the workforce during a critical period of her career and has suffered an economic disadvantage. I am satisfied that her financial ability to meet her own needs has been impaired due to her placing the needs of the family ahead of her own.”


Even more significantly, a lump sum amount of spousal support was ordered even though this is not an order to be made as a matter of course. The court found for a lump sum award because of the following:


a) There is a significant history of nonpayment of child support and a real risk, if not a certainty that ongoing periodic payments will not be made….


b) The jointly owned home is an asset against which the payment can be easily and immediately realized, and there is some urgency in dealing with the home because the joint mortgage term has expired, and the bank will not extend the current mortgage without triggering much higher rates.


c) On the record before me, the transfer of [the husband's] joint interest in the home will not affect his ability to be self-sufficient….


d) The lump sum amount being sought is based on a 10-year period of entitlement which will expire in August 2028. Although this is stated in the SSAG calculation to be a maximum duration, I find it to be fair and proportionate to the length of the marriage, the roles adopted during the marriage and the paucity of support paid to date....


e) Given the stated duration of only five more years, there is a limited period for a future variation and at this time, no evidence that the parties’ respective circumstances will materially change. Neither spouse is close to retirement age and neither has demonstrated illness or disability.


3. Joint expenses of the home


Since the husband left the home after separation, he did not contribute to the carrying costs of the home. The wife asked for reimbursement for half of these costs. With respect of the mortgage, the court said that the fact the wife had exclusive use of the property offset the mortgage. However, the court did give her reimbursement for the property taxes. Furthermore, the husband had a $20,000.00 legal aid lien on the house which was ultimately the responsibility of the husband. This was fully reimbursed:


[68] I am prepared to award [the wife] reimbursement of one half of the property taxes: $21,782 and one half of the property insurance payments: $5,553. I am not prepared to credit her by one half of the renovation costs in the absence of fulsome evidence that they were incurred. As a result, [the husband] shall pay to [the wife] post separation costs of $27,335 ($21,782 + $5,553.)


[69] When I requested a current parcel register for [the property] it was discovered that [the husband] had incurred a $20,000 Legal Aid Lien on the jointly owned home. This will be a further reimbursement to her because it is [the husband's] expense that [the wife] will have to pay.


4. Costs


The uncontested trial and the proceedings leading up costed the wife tens of thousands of dollars in legal fees. And yet she was successful at trial. The court recounted the principles of costs and ultimately found:


[77] In reviewing the fees proposed, I am satisfied that a reasonable and proportionate amount of costs is $48,000 inclusive of disbursements and HST. This amount is a partial recovery of fees up to the date of service of the February 4, 2021 Offer and a full recovery thereafter of [the wife's] reasonable fees. Counsel’s hourly rate is reasonable, the time spent was necessary and the file was progressed as efficiently as possible given the Covid delays in the court system.


Significantly, the wife made an Offer to Settle which she beat. The court found costs on partial basis up until the Offer to Settle and full recovery thereafter.


5. Vesting order with respect to the matrimonial home


Using section 9(1)(d)(i) and 34(1)(c) of the Family law Act, the court found it has the authority to vest the husband’s interest in the matrimonial home to the wife in this particular circumstance as it relates to support and equalization, so long as it was wholly offset by the outstanding claims being enforced. The court found that the wife had claims of $497,401 against the husband and yet his net equity in his interest in the home was $412,995.50. Thus, the court found:


[86] Final Order to issue transferring [the husband's] joint titled interest in [the property] to [the wife] pursuant to paragraphs 12 and 13 of the draft Order, and subject to a requirement that she discharge the joint mortgage and the Legal Aid lien from title at the same time that title is transferred.


In other words, the court found that all of the orders against the husband, including for child support, lump sum spousal support, equalization, costs, the legal aid lien, etc. totalled more than the husband's interest in the value of the matrimonial home. Therefore, the court made the above vesting order.


Conclusion


Levy v Williams navigated complex legal issues in family law, including income analysis, spousal support, joint expenses, costs, and vesting orders. The court's findings in this case primarily highlight the importance of transparency, disclosure and following court orders.

Comments


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