This recent decision from the Superior Court of Justice provides guidance for lawyers and future courts with respect to the determination of income when a payor’s income fluctuates. This case suggests that although many courts have chosen to average income to determine income for support purposes, material evidence which substantiates current income may be grounds to forego such averaging. This case provides a useful guide with regards to the jurisprudence in respect of income averaging.
Knowles v. Lindstrom, 2015 ONSC 1408
This case considers the issue of interim spousal support.
The Applicant, Ms. Knowles, and the Respondent, Mr. Lindstrom, began cohabitating in 2002 and separated in 2012. They had no children together and were never married. Throughout their relationship, the parties divided their time between Ontario and Florida. The Applicant was from Toronto and the Respondent from the U.S.
While the parties cohabited, they lived a very extravagant and lavish lifestyle. They travelled primarily by private jet, travelled and shopped extensively, were members of exclusive clubs and drove luxury vehicles. The Respondent’s income was approximately CDN $1.5 million, with no income tax payable under U.S. law. While the parties were together, the Applicant did not work. Post-separation, the Applicant moved into her adult daughter’s basement and returned to the workforce, where she earned about $78,000 a year. The Respondent continued to enjoy his lavish lifestyle.
In an earlier motion that made its way up to the Supreme Court of Canada (leave to appeal refused), the Respondent argued that Ontario did not have the jurisdiction to hear the parties’ support and property claims. The Ontario Court of Appeal determined that Ontario was the proper forum.
The issues for the Court in this motion were limited to the following:
- Whether the Applicant is entitled to interim spousal support, pending trial;
- If the Applicant is entitled to interim support, from what date should the spousal support payments commence; and
- The quantum of support.
Interim support motions do not require a detailed examination of the merits of the case. Instead, orders for interim support are based on prima facie evidence (evidence that is sufficient to establish the fact in question, unless rebutted). Interim spousal support is intended to maintain the support recipient’s lifestyle that he or she was accustomed to during the relationship, pending trial or final resolution.
Pursuant to section 29 of Ontario’s Family Law Act (FLA), the definition of “spouse” for support purposes includes either of two persons who are not married and have cohabited continuously for not less than three years. Although the Respondent argued that the parties had not resided continuously for a period of three years, the Applicant made out a prima facie case that they had cohabited for approximately ten years. Therefore, the Applicant was a spouse within the meaning of section 29 of the FLA.
Pursuant to section 30 of the FLA, “[e]very spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so.” The Respondent certainly had the ability to pay, as his net worth exceeded CDN $35 million. The issue was whether the Applicant had a need, since she was able to secure employment and had an income that covered all of her current expenses.
There are three bases for entitlement to spousal support: compensatory, contractual, and non-compensatory. Since the parties did not have a cohabitation agreement, there was no contractual basis to award the Applicant support. However, the Applicant provided evidence that she was entitled to support both on a compensatory and non-compensatory basis. First, she submitted that she was entitled to compensatory support because she was responsible for acquiring properties held in the Respondent’s name, managed their home and staff, and prepared meals and was a support to the Respondent. Second, the Applicant had a non-compensatory (needs-based) claim for support because she was living much more modestly than the standard of living to which she was accustomed throughout the relationship. “Need,” in interim spousal support cases, goes beyond the need for basic necessities and should be assessed according to the accustomed standard of living during the relationship.
The Court determined that the Applicant made out a prima face case for spousal support on a non-compensatory basis.
(2) Commencement Date
Presumptively, an Applicant is entitled to spousal support from the time he or she gives notice of the claim for support. “To do so otherwise would be to reward a party for delaying the hearing” (paragraph 30). The Applicant gave notice of her application for support in April of 2012, nearly three years from the time this motion was finally heard. The Court awarded the Applicant interim spousal support from the date she served her notice of application.
The Spousal Support Advisory Guidelines do not automatically apply to cases in which the payor’s income is over $350,000. Nevertheless, the Courts must consider the SSAGs amounts when ordering spousal support. The Court accepted the Applicant’s calculation of the SSAG range for spousal support, which was approximately $35,000-$47,000 (midpoint of about $41,000) per month. The Court determined that the Respondent’s income was properly “grossed up” to account for the fact that his income was tax-free and SSAG values are based on taxable income.
Courts have discretion in determining the quantum of spousal support. In this case, the Court determined that an interim spousal support award of $25,000 per month until trial was reasonable and appropriate, having regard to the factors listed in section 33(9) of the FLA, the SSAG amounts, and the lifestyle enjoyed by the parties throughout their relationship.