ROBERT MCDONALD COWAN Applicant And: GAIL DOROTHY COWAN Respondent, 2019 NLSC 144

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR FAMILY DIVISION Citation : Cowan v. Cowan , 2019 NLSC 144 Date : July 29, 2019 Docket : 201502F0565 Between: ROBERT MCDONALD COWAN Applicant And: GAIL DOROTHY COWAN Respondent Before: Justice Cillian D. Sheahan Place of Hearing: St. John’s, Newfoundland and Labrador Dates of Hearing: March 26-28, 2018 Written Summations Filed: Applicant: April 3, 2018 Respondent: April 26, 2018 Appearances: Sandra M. Burke, Q.C. Appearing on behalf of the Applicant Ernest L. Gittens Appearing on behalf of the Respondent Authorities Cited:

CASES CONSIDERED: Gosse v. Sorensen-Gosse, 2011 NLCA 58; Milton v. Milton, 2008 NBCA 87; Moge v. Moge, (SCC), [1992] 3 S.C.R. 813, 99 D.L.R. (4th) 456; Bracklow v. Bracklow, (SCC), [1999] 1 S.C.R. 420, 169 D.L.R. (4th)577; Chutter v. Chutter, 2008 BCCA 507; Jackson v. Jackson, 2017 ONSC 1556; C.(C.) v. C.(C.), 2012 NLTD(G) 16; Wawzonek v.Page, 2015 ONSC 4374. STATUTES CONSIDERED: Family Law Act, R.S.N.L., 1990, c. F-2; Medical Act, 2011, S.N.L. 2011

Chapter M-4.02; PensionBenefits Act, S.N.L. 1996, c. P-4.01; Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.); Divorce Act, R.S.C., 1985, c.3 (2nd Supp.). OTHER CONSIDERED: Federal Child Support Guidelines, S.O.R./97-175 (Divorce Act Regulations), Provincial Child SupportGuidelines Regulations, Newfoundland and Labrador Regulations 40/98 (Family Law Act, O.C. 98-067); Spousal Support AdvisoryGuidelines. REASONS FOR JUDGMENT Sheahan, J.: INTRODUCTION [1] Robert Cowan and Gail Cowan were married August 13, 1993 in St. John’s, Newfoundland and Labrador.

They had twochildren, Sean and Luke, and were separated on December 29, 2014, after 21.5 years of marriage. [2] The Applicant, Robert Cowan, is a high school teacher who earns approximately $92,000.00 annually. He is universityeducated and has a Bachelor of Arts degree, Bachelor of Education degree and his Master’s in Education. The Respondent, Gail Cowan,is an Anesthesiologist and an Associate Professor with Memorial University who earns approximately $360,000.00 annually. [3] Mr.

Cowan commenced an Originating Application on July 9, 2015, claiming divorce, custody, access, division ofmatrimonial property (including division of business assets), spousal support and costs. Ms. Cowan’s Response, filed September 9,2015, agreed with the claims for divorce and access to the two children; however, she was not in agreement with the claims for custody,spousal support, division of matrimonial property (particularly the claim for division of business assets) and costs.

She also made herown claim for child support as the children lived primarily with her following separation. [4] At trial neither party argued the issue of parenting. ISSUES [5] Mr. Cowan and Ms. Cowan seek a determination of the following issues: 1. Division of matrimonial property; 2. Income of Ms. Cowan; 3. Child Support; and 4. Spousal Support. ISSUE #1: Division of Matrimonial Property [6] In my decision with respect to property, I will deal with each of the items at issue separately.

Related to the matrimonial homeare the issues of the mortgage encumbering the matrimonial home, the occupation rent owed to Mr. Cowan for Ms. Cowan’s exclusiveoccupation since separation and its maintenance and operational expenses. With respect to other matrimonial assets and liabilities, I willdeal with the division of equity and/or liability associated with the 2012 Hyundai Santa Fe, the 2011 Ford Expedition, the Argo and itsassociated trailer, the parties’ bank accounts, Mr. Cowan’s pension, the RRSPs and GICs, the matrimonial debt and the alleged maritalfunds diverted by Ms. Cowan to her mother.

Matrimonial Home [7] Section 8(1) of the Family Law Act, R.S.N.L. 1990, c. F-2 (the “FLA”), gives a half interest in the matrimonial home to eachspouse regardless of whether or not title is held in one or both names. [8] The parties were living in their matrimonial home at 44 East Meadows Avenue, St. John’s, at the time of separation. Subsequent to separation, Ms. Cowan proceeded with renovations to the home. While there was some evidence of the value of theserenovations, the failure of Ms.

Cowan to produce receipts and the insufficiency of reliable evidence from the appraiser, make itimpossible to put a value on the post-separation renovations. Ms. Cowan has not met the burden of proof on this point. As a result, half

of the equity in the home should be divided equally between Mr. Cowan and Ms. Cowan without adjustment for renovations. [ 9 ] Both parties agree in their written submissions that the value of the matrimonial home is $304,500.00. Dividing this market value by two, each spouse is entitled to $152,250.00. from the matrimonial home. Both parties agree that Ms. Cowan will retain the matrimonial home and that she will pay Mr. Cowan for his half-interest.

Given the time which has gone by since the trial of this matter and the possibility of a change in market value, the parties are entitled to have the property’s market value updated prior to transfer. Therefore, I offer the parties a choice. Providing both parties agree that there has been no significant change in market value, Ms. Cowan will pay Mr. Cowan $152,250.00 for his share of the matrimonial home within 60 days of this decision. Failing agreement, the matrimonial home shall be appraised within 30 days of this decision, with the transfer and corresponding balancing payment for Mr.

Cowan’s half interest being made 60 days thereafter. The cost of the appraisal shall be shared by both parties. Mortgage Encumbering Matrimonial Home [ 10 ] At the date of separation, the outstanding balance of the mortgage encumbering the matrimonial home was $12,490.00. Ms. Cowan has paid the remaining balance of the mortgage since separation and it has now been paid in full. [ 11 ] Both parties agree that Mr. Cowan owes the sum of $6,245.00 to Ms. Cowan for his share of the mortgage encumbering the matrimonial home since separation. Therefore, Mr. Cowan will pay Ms.

Cowan $6,245.00 for his share of the mortgage expense. Occupation Rent [ 12 ] Pursuant to the Newfoundland and Labrador Court of Appeal decision in Gosse v. Sorensen-Gosse , 2011 NLCA 58 , a spouse “has the same right of use, possession and management of the matrimonial home as the other spouse” and, therefore, is entitled to occupation rent if the other spouse has exclusive possession of the matrimonial home. The Court has wide discretion as to whether there are exceptional circumstances that would justify declining to award such rent. [ 13 ] Mr.

Cowan takes the position that he is entitled to occupational rent from Ms. Cowan commencing April 2015, when he moved out, to the time that the matrimonial home is transferred to Ms. Cowan. Mr. Cowan states that he is owed the sum of $27,900.00 from Ms. Cowan for occupational rent from April 2015 up to and including March 2018, as well as $775.00 a month from April 2018 to the month in which the matrimonial property is transferred to Ms. Cowan. [ 14 ] Ms. Cowan takes the position that Mr.

Cowan is not entitled to occupational rent because he voluntarily vacated the matrimonial home and immediately moved into his late mother’s home in April 2015 at no cost to himself. Ms. Cowan argued that the Court should exercise its discretion and deny Mr. Cowan’s claim for occupational rent. [ 15 ] I am unable to find exceptional circumstances in this case to justify declining occupational rent. The two factors noted above do not amount to exceptional circumstances. Although Mr.

Cowan moved into his deceased mother’s home, the evidence is clear that he incurred many costs associated with effecting the transfer from his mother’s estate and renovating the home, not to mention the ongoing expenses of property tax, insurance and general maintenance. [ 16 ] While Gosse v.

Sorensen-Gosse suggests a sudden departure from the matrimonial home could support a brief delay to the start of occupational rent “ to give consideration to the consequences of retaining possession or selling the matrimonial home and to make the necessary adjustments and arrangements in the event that it is to be retained” ( para. 64), the principle is not applicable in this case. The evidence does not support Mr. Cowan’s departure as sudden. In addition, there were little or no financial consequences that befell Ms. Cowan with respect to the matrimonial home upon Mr. Cowan’s departure.

She was already paying the expenses associated with the home at the time of separation. [ 17 ] Both parties have agreed that the rental value of their matrimonial home was $1,550.00 a month. [ 18 ] Consistent with the decision in Gosse v. Sorensen-Gosse , Mr. Cowan is entitled to occupational rent from Ms. Cowan for reason that she had exclusive possession of the matrimonial home since April 2015. Mr. Cowan is entitled to one-half of the monthly rental value from April 2015 until the matrimonial home is transferred to Ms. Cowan. Therefore, occupation rent owed by Ms. Cowan to Mr.

Cowan from April 2015 up to and including July 2019 is $40,300.00 [($1,550.00 x 52 months) ÷ 2] and $775.00 a month for every month thereafter until the matrimonial home is transferred to Ms. Cowan. Maintenance and Operational Expenses of the Matrimonial Home [ 19 ] Also pursuant to the Court of Appeal decision in Gosse v. Sorensen-Gosse , a spouse with exclusive possession is entitled to a credit of half of the insurance and property tax expenses associated with the matrimonial home since separation. [ 20 ] Mr. Cowan takes the position that he owes Ms.

Cowan the sum of $3,908.44 for property taxes from April 2015 up to and including March 2018, as well as $107.45 from April 2017 to the month in which the matrimonial home is transferred to Ms. Cowan. [ 21 ] According to the municipal tax bill entered as a consent exhibit, the property tax paid in 2014 was the sum of $3,906.12 with a surplus of $1,327.50, or $2,578.62 annually ($214.89 a month). Unfortunately, Ms. Cowan has not presented any evidence of house insurance expenses or property tax expenses for the matrimonial home since separation.

As a result, I calculate the reimbursable maintenance and operational expenses owed to Ms. Cowan from Mr. Cowan from April 2015 up to and including July 2019 as $5,587.14 [($214.89 x 52 months) ÷ 2] and $107.45 a month for every month thereafter until the matrimonial home is transferred to Ms. Cowan. Corporations, Including the Professional Medical Corporation (“PMC”), Cowan Family Trust and East Meadows Holdings Inc. (collectively the “Corporations”)

[ 22 ] Section 18(1) of the FLA is the starting point for determining whether an asset is a matrimonial or business asset. Section 18(1) provides: (a) "business assets" means property primarily used or held for or in connection with a commercial, business, investment or other income or profit producing purpose; … (c) "matrimonial assets" includes all real and personal property acquired by either or both spouses during the marriage, with the exception of, … (iv) business assets, [ 23 ] A leading case on the division of professional licensed corporations is the New Brunswick Court of Appeal decision in Milton v.

Milton , 2008 NBCA 87 . That Court adopted a two-fold analysis for determining if monies held in a professional corporation can be properly defined as a business asset or family asset. The first question the Court considered was whether or not the asset was used principally in the course of the business carried on by that spouse. If the answer is “no”, then the asset is not a business asset but, rather, a matrimonial asset. If the answer is “yes”, then the asset in question requires further examination.

Although there are differences between our FLA and New Brunswick’s legislation ( Marital Property Act , S.N.B. 1980, c. M-1.1 ), the two-fold analysis in Milton is applicable to this case. [ 24 ] Mr. Cowan is seeking one-half of the value of the Corporations as of December 2014. Mr. Cowan’s position is that the funds held by the Corporations are matrimonial assets, not business assets, and that the monies held in the PMC constitute income otherwise payable to Ms. Cowan and diverted to the Corporations solely for tax deferral and income-splitting purposes. Mr.

Cowan also states that he is listed as a beneficiary of the Cowan Family Trust as the “spouse” of Ms. Cowan and is seeking a payout to him by way of dividend through the Trust in the sum of $85,345.50, being one-half of Mr. Cowan’s calculated value of the Corporations at separation. [ 25 ] Ms. Cowan takes the position that the monies held in the Corporations are business assets and are therefore exempt from sharing. Ms. Cowan acknowledges that the corporate structure was set up in 2011 for the purpose of minimizing income tax consequences. Ms.

Cowan’s accountant, Brent Bursey, provided evidence that the combined total equity value of the Corporations, being Dr. Gail Cowan PMC Inc., Cowan Family Trust (2011) and East Meadows Holdings Inc., is $170,691.00. [ 26 ] I do not agree with Ms. Cowan’s argument on this point. The evidence from her accountant establishes that her medical practice was incorporated for income splitting and tax deferral purposes.

She has total control of both corporations as sole director and shareholder, both in her personal capacity and in her capacity as sole trustee of the other shareholder, the discretionary family trust, under which she, her children and Mr. Cowan are beneficiaries. [ 27 ] Pursuant to

section 37 of the Medical Act, 2011 , S.N.L. 2011

Chapter M-4.02 , Ms. Cowan remains personally liable for professional negligence to persons in receipt of her medical services through her PMC. For this reason, and for reason that the principal, if not sole, purpose of her professional corporate structure is to split income and defer tax with her family members to achieve lower marginal rates of income tax, the corporate structure is wholly subordinate to Ms. Cowan in her individual professional capacity. [ 28 ] The passive funds retained by the Corporations are nothing more than assets derived from her professional income that exceeded the family’s needs.

They are not funds that are in play or at risk in the same manner as surplus funds in an enterprise that is entrepreneurial in nature. [ 29 ] Therefore, the cash assets retained by the Corporations at the time of separation were not business assets as defined by the FLA . They were not “primarily used or held for or in connection with a commercial, business, investment or other profit producing purpose.” As such, said assets are matrimonial assets held by Ms. Cowan during the marriage and are subject to equal division with Mr. Cowan. [ 30 ] Ms.

Cowan shall cause the Corporations to payout cumulative dividends totaling $85,345.50 to Mr. Cowan as a beneficiary of the Cowan Family Trust in amounts and at such times as both parties can agree. Failing agreement within 30 days of the issuance of this decision, the dividends shall be paid out in two equal tranches, one within 60 days of this decision and the other on January 1, 2020. Division of Other Matrimonial Assets and Debts [ 31 ] The other matrimonial assets and debts for which the parties seek division are the 2012 Hyundai Santa Fe, 2011 Ford Expedition, Argo and trailer, Mr. Cowan’s bank accounts, Ms.

Cowan’s bank account, the joint bank account, Mr. Cowan’s pension, the Registered Retirement Savings Plan Investments (RRSPs) and GICs, the matrimonial debt, and the alleged funds diverted by Ms. Cowan to her mother. [ 32 ] Pursuant to the FLA , matrimonial assets are to be divided between the spouses in equal shares. 2012 Hyundai Santa Fe

[ 33 ] This vehicle was purchased and used by Mr. Cowan. The outstanding balance of the vehicle loan at the date of separation was $559.89 per month for four months, totaling $2,239.56. [ 34 ] Neither party presented evidence of the value of their respective vehicles at the date of separation. Both parties presented evidence at the time of the trial of the current value of their respective vehicles. Mr. Cowan stated that the value of the 2012 Hyundai Santa Fe at the time of the trial was $13,216.00. Ms. Cowan agreed and took no issue with Mr. Cowan’s valuation. Mr. Cowan owes Ms.

Cowan $6,608.00 to equalize the value of this vehicle, minus $1,119.78 representing half of the remaining loan payments made by Mr. Cowan for four months, that balancing payment totaling $5,488.22. 2011 Ford Expedition [ 35 ] This vehicle was purchased and used by Ms. Cowan. There was no outstanding vehicle loan at the date of separation. Ms. Cowan presented evidence that the current value of her vehicle at the date of the trial was $16,250.00. Mr. Cowan agreed and took no issue with Ms. Cowan’s valuation. Ms. Cowan owes Mr. Cowan half of the vehicle’s value, that being $8,125.00.

Argo and Trailer [ 36 ] Both parties acknowledged that Ms. Cowan retained possession of both the Argo and its associated trailer since separation. Ms. Cowan presented evidence at trial that the estimated combined value of both the Argo and its trailer is between $2,500.00 and $3,000.00. Both parties accepted the mid-range value, being $2,750.00 as a reasonable value for both items. Ms. Cowan owes Mr. Cowan the sum of $1,375.00, representing half the agreed value. Mr. Cowan’s Bank Accounts [ 37 ] Mr. Cowan held two bank accounts at the time of separation: a CIBC US account and a Canadian CIBC account.

The Canadian account had a balance of $7,508.09 at the time of separation and the US account had a balance of $14,268.52 USD at separation. These amounts shall be equally divided between both spouses. Mr. Cowan owes Ms. Cowan the sum of $3,754.05 for the Canadian account and $7,134.26 USD for the US account (or $9,479.29 CAD at an exchange rate of 1.3287*), for a combined total of $13,233.34 in Canadian funds. Ms. Cowan’s Bank Account [ 38 ] Ms. Cowan held a CIBC bank account at the time of separation with a balance of $44.45, which balance shall be equally divided between them. Ms. Cowan owes Mr.

Cowan half the value, that being $22.23. Joint Bank Account [ 39 ] The parties shared a joint bank account at CIBC at the time of separation that had a balance of $1,708.51 which Ms. Cowan retained. The amount shall be equally divided between them. Ms. Cowan owes Mr. Cowan a balancing payment of $854.26 in respect of this item. *average exchange rate for June 2019, Bank of Canada Mr. Cowan’s Pension [ 40 ] Mr. Cowan acquired a pension and severance benefits during the marriage. Pursuant to

section 47 of the Pension Benefits Act , S.N.L. 1996, c. P-4.01 , a pension may be divided on marriage breakdown at the request of the member of the plan or their former spouse along with a copy of their court order or separation agreement. It has been well-established in the authorities that pension and severance benefits are matrimonial assets subject to equal division between the parties. However, Ms. Cowan does not seek a division of Mr. Cowan’s pension or severance benefits.

For reasons I will provide later under the issue of spousal support, I have decided not to order a division of these employment benefits in favour of Ms. Cowan. RRSPs and GICs [ 41 ] Both parties held their own RRSP and GIC accounts. Both parties testified that they have not contributed or withdrawn monies from their RRSPs following separation. [ 42 ] The value of each of the RRSP/GIC accounts shall be as of the date of rollover and are to be shared equally.

Both parties shall transfer half of their respective RRSP/GIC accounts to the other party pursuant to the relevant terms of the Income Tax Act , R.S.C., 1985, c. 1 (5th Supp .), and each party shall execute Canada Revenue Agency Form T2220 to effect the rollover. Matrimonial Debt [ 43 ] The marital debt at the date of separation is as follows: Mr. Cowan’s VISA credit card in the amount of $7,742.27 and the joint line of credit in the amount of $19,868.21. [ 44 ] Mr.

Cowan provided evidence that the balance owing on his VISA credit card as of December 22, 2014 was $5,446.90, which balance he paid post-separation on January 12, 2015. Mr. Cowan also provided evidence that from December 22, 2014 to December 29, 2014 there was an additional balance on his credit card in the amount of $2,295.37. As of the date of separation, the balance owing on Mr. Cowan’s VISA credit card was $7,742.27. Ms. Cowan agreed with Mr. Cowan’s evidence. Therefore, Ms. Cowan is responsible for half of that credit card debt and owes a balancing payment to Mr.

Cowan in the amount of $ 3,871.14 . [ 45 ] Mr. Cowan provided evidence that the balance owing on the joint line of credit as of the date of separation was $19,868.21. Ms. Cowan agreed with Mr. Cowan’s evidence. Therefore, Mr. Cowan is responsible for half of that amount and owes a balancing payment to Ms. Cowan in the amount of $9,934.11. At the time the balancing payment is made, Ms. Cowan shall remove Mr. Cowan

from any liability associated with the joint line of credit with the agreement of the bank or, failing agreement, she shall close out the credit account entirely. [ 46 ] Ms. Cowan did not provide any evidence to support any debt on either her CIBC VISA credit card or her line of credit as of the date of separation. Therefore, I am unable to make any determination in relation to balancing payments owed by Mr. Cowan for these items. Marital Funds Diverted by Ms. Cowan to her Mother [ 47 ] Ms. Cowan helped finance the repairs and renovation of her mother’s home approximately six months prior to separation. Mr.

Cowan takes the position that Ms. Cowan diverted marital funds that would otherwise have been available for investment and shared with Mr. Cowan. Mr. Cowan argues that he should be reimbursed for the amount Ms. Cowan diverted to her mother. Ms. Cowan takes the position that both her and Mr. Cowan benefitted tremendously and continuously from the assistance provided by her mother, and that the evidence shows that both parties spent their own money in their own way. Ms. Cowan states that she did not divert funds to her mother. [ 48 ] I do not agree with Mr. Cowan’s argument.

It is clear from the evidence that in the latter years of the marriage both parties spent the money they earned as they saw fit with little or no discussion with the other. It is also true that Ms. Cowan’s mother was helpful to the family, especially with respect to providing childcare on short notice, including times when Mr. Cowan was parenting the children and wanted to play golf. There was no evidence that he objected to Ms. Cowan funding her mother’s renovations at the relevant time, nor that the money was given with the expectation that it was to be repaid.

Therefore, I consider these funds to have been gifted to Ms. Cowan’s mother prior to the parties’ separation with Mr. Cowan’s implied consent and conclude that there is no balancing payment owed to Mr. Cowan in relation to same. [ 49 ] Mr. Cowan’s balancing payment to Ms.

Cowan for division of property and debts: Item Total Amount Balancing Payment Mortgage 12,490.00 6,245.00 Property Tax (April 2015-July 2019) $214.89 x 52 months 11,174.28 5,587.14 2012 Hyundai Sante Fe 13,216.00 5,488.22 CIBC US Account (avg. exchange rate June, 2019 1.3287) USD 14,268.25 or CAD 18,958.58 USD 7,134.26 or CAD 9,479.29 CIBC Canadian Account 7,508.09 3,754.05 Joint Line of Credit 19,868.21 9,934.11 BALANCE OWING $40,487.81 [ 50 ] Ms. Cowan’s balancing payment to Mr.

Cowan for division of property and assets: Item Total Amount Balancing Payment Matrimonial Home 304,500.00 152,250.00 Occupation Rent (April 2015 – July 2019) $775.00 x 52 months 80,600.00 40,300.00 Corporations 170,691.00 85,345.50 2011 Ford Expedition 16,250.00 8,125.00 Argo / Trailer 2,750.00 1,375.00 CIBC Bank Account 44.45 22.23 Joint Bank Account 1,708.51 854.26 VISA 7,742.27 3,871.14 BALANCE OWING $292, 143.13 ISSUE #2: Income of Ms. Cowan [ 51 ] Ms.

Cowan’s income is relevant to determining the parties’ proportional shares of the children’s special expenses (university tuition), as well as the amount of Ms. Cowan’s obligation for spousal support in favour of Mr. Cowan. Applicable Law [ 52 ]

Section 16 of the Federal Child Support Guidelines , S.O.R./97-175 ( Divorce Act Regulations ) (the “ Guidelines ”), is the starting point for determining the income of a shareholder or director of a company.

Section 16 provides: 16. Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading "Total Income" in the T-1 General form issued by Canada Revenue Agency and is adjusted in accordance with

Schedule III. [ 53 ] If a court finds that the income determined under

section 16 does not fairly represent all of the income available to a shareholder or director for child support purposes, the court may apply the provisions of

section 18 of the Guidelines which gives the court discretion to attribute some or all of the pre-tax income of a corporation to the shareholder or director personally or, in the alternative, to attribute

an amount less than or equal to the pre-tax corporate income that is commensurate with the services that the parent provides to the corporation.

Section 18 provides the following: 18.

(1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under

section 16 does not fairly reflect all the money available to the spouse for the payment of child support, the court may consider the situations described in

section 17 and determine the spouse’s annual income to include (

a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or (

b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income.

(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arms length shall be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances. [ 54 ] The Newfoundland Court of Appeal in Gosse v Sorenson- Gosse discussed the guiding principles for the application of the Guidelines when imputing pre-tax corporate income.

At paragraphs 93 and 94 the Court noted that many professionals manage their practices through professional corporations and the necessity, in such circumstances, to impute income for the purposes of the Guidelines is obvious. The Court went on to state that because a professional chooses to record his or her income through a wholly-owned corporation does not justify reducing the pre-tax corporate income by factors that would not warrant reducing an unincorporated professional’s income. 94.

In the case of a sole shareholder, the effect is, essentially, to ignore the corporate structure, for Guidelines income assessment purposes only, and to treat the shareholding spouse in the same manner as that spouse would be treated if the business were carried on in the name of that spouse personally. [ 55 ] The Guidelines are intended to recognize all of the income available for child support that is under the discretionary control of the spouse, excluding legitimate obligations of the corporation. Position of the Parties [ 56 ] Mr. Cowan takes the position that most of Ms.

Cowan’s claimed business deductions and expenses, including bank charges, office expenses and insurance fees and dues, should be added back to the PMC’s pre-tax income. Mr. Cowan determined Ms. Cowan’s gross annual income, including her personal income and adjusted PMC pre-tax income, should have been as follows: 2015: $361,739.00 2016: $365,232.00 2017: $402,388.00 [ 57 ] Ms.

Cowan maintains that her gross annual income, including the PMC’s pre-tax income, was exactly as described by her accountant, Brent Bursey, which income amounts include deductions for bank charges, office expenses and insurance fees and dues, those amounts being: 2015: $351,196.00 2016: $345,174.00 2017: $390,019.00 Evidence Relevant to the Issue [ 58 ] Brent Bursey, a Chartered Professional Accountant, presented evidence to the Court that Ms.

Cowan’s income from her PMC and as an associate professor at Memorial University, together with interest earned, was as follows: PMC - 2015 $250,000.00 2016 $200,000.00 2017 $200,000.00 Other Income - MUN Interest Total 2015 $4,000.00 $2.00 $4,002.00 2016 $385.00 $0.00 $385.00

2017 $7,585.00 $5.00 $7,590.00 [ 59 ] Brent Bursey testified that the pre-tax income of Ms. Cowan’s PMC was as follows: 2015: $97,194.00 2016: $144,789.00 2017: $182,429.00 [ 60 ] Brent Bursey further testified that Ms. Cowan’s income from 2015 to 2017 was as stated in paragraph 57 of this decision. He said that his calculation of Ms. Cowan’s annual income was completed as if the corporate structure did not exist and she was carrying on business as a proprietorship. [ 61 ] In arriving at their income figures for the PMC, Ms.

Cowan deducted several expenses from pre-tax income, which deductions include: Bank Charges 2015 $202.00 2016 $561.00 2017 $270.00 Insurance, Fees and Dues 2015 $6,237.00 2016 $13,485.00 2017 $9,732.00 Office and General 2015 $4,104.00 2016 $6,012.00 2017 $2,637.00 Travel About $2,200.00 a year. [ 62 ] Mr. Cowan is seeks to adjust the pre-tax corporate income of the PMC by adding back the amounts in the categories of bank charges, insurance, fees and dues, and office expenses. Mr. Cowan is not seeking to adjust the PMC pre-tax corporate income in relation to the travel deduction.

Analysis and Findings [ 63 ] By implication, Ms. Cowan concedes that her personal income as reported to the Canada Revenue Agency does not fairly represent all of her income available for the payment of support. The question to be determined by the Court is whether or not the deductions she has made to the PMC pre-tax income are appropriate.

Section 17 of the Guidelines permits a court to impute income in circumstances where the spouse unreasonably deducts expenses from income.

Section 18 of the Guidelines permits the court to consider such a circumstance in determining whether or not all or part of the pre-tax income of a corporation should be included in the spouse’s income for child support purposes. [ 64 ] I am of the view that the deductions to pre-tax corporate income for bank charges are appropriate. A bank account for the PMC is necessary to facilitate the receipt and flow of funds for expenses, salary and dividends. It is an essential component to maintaining the corporate structure which, in turn, minimizes the extent of personal income tax payable by Ms.

Cowan and, therefore, maximizing income available for purposes of paying support. [ 65 ] I take a similar view to insurance premiums and professional dues paid by the PMC. Professional liability insurance and dues payable to one’s professional governing body are necessary to maintain Ms. Cowan’s license to practice her profession. Had she not been incorporated and carried on her practice as a proprietorship, these fees and dues would be payable and, in turn, would be an appropriate deduction to income under

Schedule III of the Guidelines . [ 66 ] I take a different view of the claimed office and general expenses. In her evidence, Ms. Cowan was unable to explain the expenses in this category. Her accountant assumed that the expenses were in relation paper, printer, laptop and other similar expenses, together with the expenses associated with a Christmas party for Ms. Cowan’s medical staff on her hospital floor or department. Ms. Cowan did not provide evidence that she operated a “home office”. As such, there is no evidence that Ms.

Cowan requires home office expenses to perform her profession as a physician and professor. Further, I do not consider the expenses associated with a Christmas party for staff and colleagues as a necessary and incidental component of her professional occupation.

While it is a generous gesture on her part, it is not a reasonable deduction from her PMC pre-tax income and should be added back in order to fairly reflect all of the money available to her for support purposes. [ 67 ] As a result, the pre-tax corporate income of the PMC after adding back the office and general expenses is as follows: 2015: $97,194.00 + $4,104.00 = $101,298.00 2016: $144,789.00 + $6,012.00 = $150,801.00 2017: $182,429.00 + $2,637.00 = $185,066.00

[ 68 ] Taking the foregoing adjusted pre-tax income of the PMC into account, together with Ms. Cowan’s salary from the PMC and her other income, I conclude that Ms. Cowan’s total income for support purposes is as follows: 2015: $101,298.00 + $250,000.00 + $4,002.00 = $355,300.00 2016: $150,801.00 + $200,000.00 + $383.00 = $351,184.00 2017: $185,066.00 + $200,000.00 + $7,590.00 = $392,656.00 ISSUE #3: Child Support & Special Expenses [ 69 ] Ms. Cowan is not seeking child support from Mr. Cowan on the condition she is not obligated to pay him spousal support.

For reasons that will follow under that issue, I have decided that Mr. Cowan has marginal entitlement to limited-term spousal support. As a result, I must address the issue of child support. Evidence Relevant to the Issue [ 70 ] The parties have two children: Sean, who was 22 years old at the time of the parties’ separation, and Luke, who was 18 years old at the time of the parties’ separation. [ 71 ] Since separation, both children have resided with Ms. Cowan and she has been fully responsible for their support, including the expenses associated with their post-secondary education. Mr. Cowan has not paid Ms.

Cowan any child support, however he does acknowledge his child support obligation. [ 72 ] Sean has dealt with and continues to deal with significant health issues. As a result of continuing health challenges, he interrupted his studies at Memorial University in December 2015. At the time of the trial, he was undergoing evaluation by an orthopedic surgeon in order to determine if back surgery was required. Sean moved out of the family home in the latter part of the summer of 2016 and has been working in the labour and service industries at minimum wage. Ms.

Cowan testified that Sean intended to return to the family home in April 2018 with plans to continue his studies at Memorial University in September 2018. Both parties have testified that Sean is estranged from his father. [ 73 ] Luke is a full-time student at Memorial University and anticipates completing his undergraduate degree in April 2019. Luke has also dealt with and continues to deal with health issues. Ms. Cowan states that Luke has a good relationship with his father. [ 74 ] Since separation, Ms. Cowan has provided fully for the children’s financial and post-secondary educational needs.

The only special expenses submitted in evidence were the following: Sean Tuition Expenses 2014/15 Winter $1,585.39 2015/16 Fall $1,121.43 Luke Tuition Expenses 2015/16 Fall $1,636.43 2015/16 Winter $1,637.43 2016/17 Fall $1,383.38 2016/17 Winter $1,638.38 2017/18 Fall $1,980.40 2017/18 Winter $1,884.40 Total $12,867.24 Both children claimed the tuition tax credit on their own respective income tax returns. Position of the Parties [ 75 ] Ms.

Cowan takes the position that she has provided financially for both children before and after separation, including extraordinary and/or special expenses of university tuition. Final written submissions from counsel for Ms. Cowan do not go further than to state that if she is not required to pay spousal support, she will continue providing financially for the children and does not want Mr. Cowan to pay child support. [ 76 ] Mr. Cowan has not paid child support since separation.

He accepts that he has a child support obligation but submits that his eldest son ceased being a “child of the marriage” when he discontinued attendance at his post-secondary school in January 2016 at the age of 22. He acknowledges that his other son remains a child of the marriage and continues to reside with Ms. Cowan, attending Memorial University on a full-time basis with an anticipated graduation date of April 2019. Although the children are currently over the age of majority, Mr.

Cowan does not take issue with the applicable table amount of child support under the Guidelines as being the appropriate approach for determining quantum. [ 77 ] Mr. Cowan acknowledges that he is obligated to pay his proportional share of the cost of the children’s special expenses; however, his position is that his share of the cost must be net of any tax benefit to Ms. Cowan. [ 78 ] Although the parties agree on a separation date of December 29, 2014, Mr.

Cowan did not move out of the matrimonial home until April 2015 and the parties did not alter the manner by which they dealt with their financial affairs until that event. Both boys continued to live full-time with their mother. Analysis and Findings

[ 79 ] Child Support: Given the evidence before the Court and recognizing that child support is the right of the child as opposed to the parent, I am satisfied that Mr. Cowan has the obligation to pay child support for two children of the marriage effective April 1, 2015 until and including December 2015 when Sean discontinued his full-time attendance at school. Mr. Cowan’s child support obligation for Luke continued from January 2016 until and including his anticipated graduation date of April 2019.

The calculations for table amount child support are as follows: April 2015 to December 2015 (2 children residing with Ms. Cowan) Robert Cowan’s income: $92,155.00 (adjusted for union dues) Child Support: $1,295.00 per month for 9 months = $11,655.00 January to December 2016 (1 child residing with Ms. Cowan) Robert Cowan’s income: $92,273.00 (adjusted for union dues) Child Support: $796.00 per month for 12 months = $9,552.00 January to November 2017* (1 child residing with Ms.

Cowan) Robert Cowan’s income: $91,278.00 (adjusted for union dues) Child Support: $796.00 per month for 11 months = $8,756.00 * Federal Child Support tables updated effective November 22, 2017 December 2017 to April 2019 (graduation) (1 child residing with Ms. Cowan) Robert Cowan’s income: $91,278.00 (using 2017 income, adjusted for union dues) Child Support: $807.00 per month for 17 months = $13,719.00 [ 80 ] Therefore, Mr. Cowan’s total child support obligation from April 2015 to April 2019 is $43,682.00 .

If Sean did return to live with his mother and re-commenced full-time studies at Memorial University in September 2018, as was suggested he might in Ms. Cowan’s testimony, then Mr. Cowan’s child support obligation should increase to $1,310.00 per month for two children of the marriage effective September 2018 until April 2019 when Sean should be in a position to graduate. [ 81 ] Special Expenses: Although both children claimed the tuition tax credit on their respective income tax returns, Mr. Cowan takes the position that that Ms.

Cowan “ostensibly” received the tax benefit of the credit because she was able to divert income from the PMC in the form of dividends to the Cowan Family Trust and then to the children’s post-secondary expenses. Mr. Cowan’s position is that section 7(3) of the Guidelines requires the Court to take into account any tax credit relating to the claimed

section 7 special expenses. [ 82 ] I had some difficulty understanding Mr. Cowan’s argument in this regard as it was not put forward in detail in his written submissions at the conclusion of the trial. Presumably, the tax credit being referred to here by counsel for Mr. Cowan is the fact that the tuition expense was decreased by the tax credit available to the children and, therefore, indirectly a benefit to Ms.

Cowan because less funds were then required to be distributed to the children to cover the expense, leaving more after-tax income in the PMC. [ 83 ] This argument, however, ignores the fact that the dividends from the Trust were actually paid from after-tax corporate income for the sole benefit of the children as beneficiaries of the Trust. This was legally permissible during the relevant period. These tuition dividends were taxable in their hands. Ms.

Cowan received no tax benefit from these tuition dividends and the pre-tax corporate income used for the determination of her total income in the relevant years is unaffected by such dividends being paid for the children’s tuition, meaning it does not negatively impact the amount of spousal support she may be required to pay.

Conversely, had she been in the position of claiming the tax credit by having to draw down the personal pre-tax amount of funds necessary to pay the children’s tuition herself, her personal income would be increased while the pre-tax corporate income attributed to her for support purposes would remain

unchanged. This would only serve to increase the amount of spousal support she is required to pay pursuant to the Spousal SupportAdvisory Guidelines, a result I would find unfair, going beyond the objective of a fair determination of income available for supportpurposes. For these reasons, I reject the argument that the Court must take account of the tax credit for the tuition expenses indetermining the amount to be paid proportionally by both parents. It was not a tax credit available to Ms. Cowan, directly or indirectly. [84] As a result, Mr.

Cowan shall share in the post-secondary expenses of the children proportionally based on the parties’respective incomes. I have already determined Ms. Cowan’s income over the relevant period. However, Mr. Cowan’s income forspecial expense purposes will depend on the quantum of spousal support he may be awarded, the determination of which follows underthe next issue heading. I will return to the special expense issue following that determination. ISSUE #4: Spousal Support Applicable Law The framework for analyzing a spousal support claim is outlined by the Supreme Court of Canada in Moge v.

Moge, (SCC), [1992] 3 S.C.R. 813, 99 D.L.R. (4th) 456 and Bracklow v. Bracklow, (SCC), [1999] 1 S.C.R. 420, 169 D.L.R.(4th) 577. [85] In Bracklow, McLachlin J. (as she then was) stated: 35 Moge, supra, sets out the method to be followed in determining a support dispute.

The starting point is the objectives which theDivorce Act stipulates the support order should serve: (1) recognition of economic advantage or disadvantage arising from the marriageor its breakdown; (2) apportionment of the financial burden of child care; (3) relief of economic hardship arising from the breakdown ofthe marriage, and (4) promotion of the economic self-sufficiency of the spouses: s. 15.2(6). No single objective is paramount; all must beborne in mind.

The objectives reflect the diverse dynamics of the many unique marital relationships. 36 Against the background of these objectives the court must consider the factors set out in s. 15.2(4) of the Divorce Act. Generally, thecourt must look at the "condition, means, needs and other circumstances of each spouse". This balancing includes, but is not limited to,the length of cohabitation, the functions each spouse performed, and any order, agreement or arrangement relating to support. Dependingon the circumstances, some factors may loom larger than others.

In cases where the extent of the economic loss can be determined,compensatory factors may be paramount. On the other hand, "in cases where it is not possible to determine the extent of the economicloss of a disadvantaged spouse ... the court will consider need and standard of living as the primary criteria together with the ability topay of the other party": Ross v. Ross (1995), (NB CA), 168 N.B.R. (2d) 147 (N.B. C.A.), at p. 156, per BastaracheJ.A. (as he then was). There is no hard and fast rule.

The judge must look at all the factors in the light of the stipulated objectives ofsupport, and exercise his or her discretion in a manner that equitably alleviates the adverse consequences of the marriage breakdown. [86] Based on the statutory provisions and case authority, the Supreme Court of Canada identified three grounds for entitlement tosupport: (1) compensatory support, which primarily relates to the first two objectives of the Divorce Act; (2) non-compensatory support,which primarily relates to the third and fourth objectives; and (3) contractual support. Position of the Parties [87] Mr.

Cowan claims both compensatory and non-compensatory spousal support. He takes the position that he gave up his chanceof a vice-principal job for the family and that since separation his lifestyle has been significantly compromised. While married, he wasable to use a significant amount of his salary on his personal needs and wants. Since separation, he is now financially responsible to paya mortgage and household expenses which he was not responsible for during the marriage. Mr. Cowan’s position is that he should beentitled to the same standard of living post-separation as he enjoyed during the marriage.

He is seeking both a retroactive andprospective lump sum award of support, calculated using DivorceMate software, with a duration terminating in 2028. In the alternativeto a lump sum prospective award, Mr. Cowan seeks mid-range monthly spousal support for an indefinite period with a review ofquantum upon Luke no longer being a “child of the marriage” (May 2019). [88] Mr.

Cowan testified that throughout the marriage he cared for the children during the summer months and school holidays, hecoached several of the children’s sports teams, he organized and participated in their fundraisers, he was responsible for household dutiesincluding garbage, snow removal, lawn care, grocery shopping and taking care of the family dog, he often played with the children andhe cared for the children while Ms. Cowan was working. [89] Ms. Cowan takes the position that Mr. Cowan is not entitled to spousal support on either a compensatory or non-compensatorybasis.

She maintains that their marriage was not a joint venture and that Mr. Cowan has not suffered any economic disadvantage sincetheir separation. From her perspective, throughout their marriage the children and maintenance of the home were primarily herresponsibility. She states that a disparity of income, in and of itself, does not create entitlement to spousal support. Evidence Relevant to the Issue [90] The couple had known each other for about seven years prior to their marriage in August 1993. Not long before their marriage,their oldest child, Sean, was born on March 20, 1993.

Initially, the couple moved in together, living in Ms. Cowan’s parent’s basementapartment for a few months following Sean’s birth until they were able to purchase their own home that summer on Torbay Road, St.John’s. This Torbay Road home had two income producing apartments in the basement which almost covered their monthly mortgagepayment. During this period, Ms. Cowan was in medical school at Memorial University and Mr. Cowan was working as a substituteteacher three to four days per week. [91] Ms.

Cowan graduated from medical school in 1994 and went on to complete a one-year internship followed by a four-yearresidency in Anesthesiology. During the summer of 1996, the family purchased a new home on East Meadows Avenue using a joint line

of credit for the down-payment. This property also had an income producing apartment. They kept the Torbay Road property as a three- unit rental but sold it after a couple of years. Their youngest child, Luke, was born February 24, 1997. In 1998, the couple separated for approximately six weeks during a period when Ms. Cowan was preparing for her residency exams in Anesthesiology. In 2001, Mr. Cowan completed a Master’s degree in Education which allowed him to secure a full-time teaching position at an elementary school. He took one course per term and it took him 3.5 years to complete. Mr.

Cowan testified that in 2004 or 2005 his employer asked if he would be interested in taking some courses to make him eligible for potential vice-principal jobs but he did not take advantage of the opportunity because it meant having to go to work earlier and stay later in the evening. He did not approach Ms. Cowan to discuss the opportunity at any length. He said he cannot not take advantage of that opportunity at this stage of life because he plans on retiring in five or six years. [ 92 ] The couple maintained separate bank accounts throughout their relationship. After they married and while Ms.

Cowan was in medical school, the couple lived off of Mr. Cowan’s substitute teacher’s income and the proceeds of a joint line of credit. Ms. Cowan handled most of the finances and she was able to access Mr. Cowan’s bank account to transfer money to pay bills as required. She said, prior to 1998 her income was not significant and Mr. Cowan’s income was reasonable but she took over the finances to get structure and ensure the financial priorities were met. From her perspective, the finances were falling apart and she felt like she had to step-up and take control. [ 93 ] When Ms. Cowan achieved her specialty, Mr.

Cowan said they could take trips to Florida and buy what they wanted. Ms. Cowan stopped accessing Mr. Cowan’s bank account. Ms. Cowan’s evidence is somewhat different, but not contradictory. She said by the time she became fully qualified in her profession, they had accumulated a lot of debt, including the line of credit which had grown to $100,000.00. Since they were no longer living cheque-to-cheque, she began paying down on their debt, eliminating the line of credit, paying down on their mortgage and accumulating some savings in her RRSP’s and, later, in her PMC bank account.

They stopped renting out the downstairs apartment and took over the space for their own use. They were not big spenders to the extent that her income might otherwise suggest. They did not run out and purchase a new home for the family and they did not purchase pricey European automobiles. Rather, her surplus income, beyond the cost of living comfortably, was primarily directed to eliminating their combined debt and the accumulation of savings. The mortgage was only fully retired after the couple’s separation. [ 94 ] As time progressed, Ms. Cowan continued to manage the finances and pay most of the bills. Mr.

Cowan would use his income to buy groceries for the four-person household. As the children got older, Ms. Cowan would also purchase groceries from time-to-time to address what she thought were dietary deficiencies associated with Mr. Cowan’s purchases. Mr. Cowan made his own car payments, including insurance and fuel expenses. He usually bought his own clothes and, when the children were old enough, he paid for their gym memberships along with his own. Two years prior to separation he took responsibility for the cable bill at Ms. Cowan’s request. Aside from these expenses, Mr.

Cowan became accustomed to being able to spend the remainder of his income on whatever he wanted. He began playing golf three to four times per week in 2006 or 2007 during the golfing season. He would take a trip with his friends approximately two or three times per year. [ 95 ] Both parents assumed parenting responsibilities throughout the relationship, although Ms. Cowan takes the position that she was the primary caregiver when she was not working and her mother fulfilled that caregiving role when she was working. Before Luke was born, Mr. Cowan says he looked after Sean if he was not substitute teaching.

If he was working, Ms. Cowan’s mother would look after him until he got home. Mr. Cowan acknowledged in his evidence that Ms. Cowan’s mother did play a significant role in caring for the children throughout the marriage. As the children got older, Mr. Cowan usually took them to school and the maternal grandmother would pick them up. After Mr. Cowan got home from school, he would relieve the grandmother and when Ms. Cowan arrived home from work, Mr. Cowan would often go to the gym while she cooked supper. [ 96 ] Mr.

Cowan coached basketball for both his children for a few years between grades 7 and 10 for Sean and 8 and 9 for Luke. He was the teacher representative for Sean’s basketball team in high school. He also coached soccer for his children during the school year. He participated in fundraising activities for their sport teams. He often played street sports with his children and their friends outside their house. He walked the family dog, cut the lawn and took out the garbage. During the summer when Mr. Cowan was not teaching, he testified that he looked after the children.

If he wanted to play golf, he would ask his mother-in-law to look after the children. [ 97 ] While Ms. Cowan acknowledges many of Mr. Cowan’s contributions noted above, her evidence minimized their value to the family unit. From her perspective, she had to work very hard in her medical career and when she got home from work she was also the primary parent. She does not believe that Mr. Cowan supported her sufficiently throughout the 21.5 year marriage. Had he done so, she would have been able to devote more time to her career, taking jobs that may have demanded more hours at work.

Instead, she took positions that maximized her time at home so that she could perform the primary caregiving role for the children. [ 98 ] Up until Ms. Cowan completed her residency in 1999, Mr. Cowan’s evidence was that the family lived week-to-week, depending on his income, her small income and significantly upon their line of credit. [ 99 ] Mr. Cowan’s gross average annual earnings from 2015 to 2017 was approximately $92,000.00 while Ms. Cowan’s average over the same period was approximately $366,000.00. [ 100 ] Since the parties separated, Mr.

Cowan acquired financial obligations that he was not accustomed to paying, including a mortgage, home insurance, property taxes and utility expenses. He inherited a one-third interest in his mother’s home, which property was valued at $300,000.00 but carried a $120,000.00 mortgage at the time of her death in November 2014. He decided to keep the property for himself and buy-out his brother and sister’s interest at $60,000.00 each.

The home needed work so he re-financed the mortgage to both pay-out one of his siblings and complete significant renovations and repairs to the home that amounted to more than $150,000.00. His evidence was that he is now carrying a VISA debt of more than $28,000.00, a mortgage of $340,000.00 with a $1,600.00 per month payment, and a line of credit of almost $10,000.00 that is at its limit. He has yet to pay his brother for his interest in the inherited home. He submitted evidence that he has annual expenses of $76,000.00 before servicing his credit card and line of credit debt.

On direct examination, in the context of being questioned about the debt he accumulated since the separation, he testified that he has been trying to maintain the lifestyle he was accustomed to in the marriage.

Analysis and Findings Compensatory Support [ 101 ] The doctrine of equitable sharing of the consequences of marriage or its breakdown is at the core of the compensable model for spousal support. In Moge , the Court addressed the purpose of the doctrine, stating it: … seeks to recognize and account for both the economic disadvantages incurred by the spouse who makes such sacrifices and the economic advantages conferred upon the other spouse.

Significantly, it recognizes that work within the home has undeniable value and transforms the notion of equality from the rhetorical status to which it was relegated under a deemed self-sufficiency model, to a substantive imperative.

In so far as economic circumstances permit, the Act seeks to put the remainder of the family in as close a position as possible to the household before the marriage breakdown. [para. 74] [ 102 ] And later, at paragraph 85: 85 Although the doctrine of spousal support which focuses on equitable sharing does not guarantee to either party the standard of living enjoyed during the marriage, this standard is far from irrelevant to support entitlement ....

Furthermore, great disparities in the standard of living that would be experienced by spouses in the absence of support are often a revealing indication of the economic disadvantages inherent in the role assumed by one party. As marriage should be regarded as a joint endeavour, the longer the relationship endures, the closer the economic union, the greater will be the presumptive claim to equal standards of living upon its dissolution. [ 103 ] Although the marriage was of long duration, beyond the 20-year threshold normally attributed to such designation, the evidence does not establish that Mr.

Cowan has suffered an economic disadvantage or that Ms. Cowan has been conferred an economic advantage as a result of the role Mr. Cowan assumed in the marriage. [ 104 ] While Ms. Cowan was completing her medical degree and then her residency in anesthesiology, Mr. Cowan was pursuing a full- time teaching position while he worked as a substitute teacher three or four days per week. He was told in 1998 or 1999 that if he started his Master’s program, he would be able to get a full-time position at St. Paul’s Elementary.

He started his Master’s program, completing it in 2001 and securing a full-time position early in the process. [ 105 ] Being a teacher, he was usually home earlier than Ms. Cowan, yet the couple relied heavily on Ms. Cowan’s mother for childcare. Mr. Cowan was very involved in after-school sporting activities associated with the school, meaning his day went beyond the end of class. The maternal grandmother regularly took care of the children after school, picking them up and caring for them until Mr. Cowan got home from work. When Ms. Cowan got home, she prepared supper while Mr.

Cowan often went to the gym for a workout. Despite being employed in a demanding career, Ms. Cowan managed to regularly attend to the needs of her children. She assisted with their homework and she stayed home from work on days when they were sick and her mother was unavailable. This time with family did not come without cost to her career, turning down an anesthetist position at St. Clare’s Mercy Hospital in 1999 and later, a full-time professorship with higher income and pension benefits. After the separation, the children remained living with Ms.

Cowan, a fact which confirms the close parenting relationship she maintained over the years. [ 106 ] While Mr. Cowan assumed parenting responsibilities during the marriage, including some childcare, regular grocery shopping, yard care, involvement with the children’s sporting activities and their play time, none required him to forego career opportunities that put him at an economic disadvantage after the breakdown of the marriage. His pursuit of a career goal was neither set aside nor delayed. He obtained the full-time teaching position.

He completed his Master’s program and his contributions to the family unit outside of his employment did not eclipse those of Ms. Cowan. [ 107 ] With respect to the claim that he passed on the opportunity to enter the pool for vice-principal positions because it meant too much time away from family, I am not satisfied that this is a forgone opportunity that justifies compensation. There was no evidence to corroborate his claim.

He described the opportunity as one that involved him having to do some courses on finance and discipline for a couple of years after which his name would then go into a pool of names that would subsequently enable him to apply for vice-principal positions. Hardly a certain prospect. The decision to forego was made by him alone without discussion with Ms. Cowan. In that sense, it was not a shared decision in the interest of the family. Although he says he gave up on this opportunity for the family, his time outside of work continued to involve a regular

schedule of activities and pastimes that took him away from the family on individual pursuits, relying heavily on the maternal grandmother’s assistance with the children and Ms. Cowan’s meal preparation, housekeeping duties and

homework with the children. The point being, if he did pass on this potential opportunity for a vice-principal position, the extra time it accommodated was not applied in any significant way towards family objectives. For these reasons, I conclude that Mr. Cowan did not forego career advancement to support the family or further Ms. Cowan’s career aspirations. The disparity of income that now exists between them is not related in any way to sacrifices made by Mr. Cowan for the good of the family or the role he adopted during the marriage. As such, he is not entitled to compensatory spousal support.

Non-Compensatory Support [ 108 ] Non-compensatory support looks, not at a loss of earning capacity, but at the mutual obligation of partners in a marriage that exists as a consequence of the marriage relationship itself and the needs of each spouse arising out of economic hardship, if any, following marriage breakdown. [ 109 ] In Bracklow at paragraph 49 , the Supreme Court of Canada referred to the mutual obligation of spouses upon marriage breakdown as the foundation of the concept of non-compensatory support: Marriage, as this Court held in Moge (at p. 870), is a "joint endeavour", a socio-economic partnership.

That is the starting position. Support agreements are important (although not necessarily decisive), and so is the idea that spouses should be compensated on marriage breakdown for losses and hardships caused by the marriage. Indeed, a review of cases suggests that in most circumstances compensation now serves as the main reason for support. However, contract and compensation are not the only sources of a support obligation. The obligation may alternatively arise out of the marriage relationship itself.

Where a spouse achieves economic self-sufficiency on the basis of his or her own efforts, or on an award of compensatory support, the obligation founded on the marriage relationship itself lies dormant. But where need is established that is not met on a compensatory or contractual basis, the fundamental marital obligation may play a vital role. Absent negating factors , it is available, in appropriate circumstances, to provide just support. [Emphasis added in bold] [ 110 ] In Chutter v.

Chutter , 2008 BCCA 507 , the British Columbia Court of Appeal summarized the general concepts underlying non- compensatory entitlement at paragraph 54: Non-compensatory support is grounded in the "social obligation model" of marriage, in which marriage is seen as an interdependent union. It embraces the idea that upon dissolution of a marriage, the primary burden of meeting the needs of the disadvantaged spouse falls on his or her former partner, rather than the state ( Bracklow , at para. 23 ).

Non-compensatory support aims to narrow the gap between the needs and means of the spouses upon marital breakdown, and as such, it is often referred to as the "means and needs" approach to spousal support. [ 111 ] After quoting the foregoing paragraph, the Court in Jackson v. Jackson , 2017 ONSC 1566 , further stated: 294 Again, in assessing entitlement based on non-compensatory grounds, the need of a spouse must be measured against the marital standard of living of the parties.

A spousal support claimant who is able to meet their basic needs following separation will not necessarily be considered self-sufficient if their standard of living has been significantly reduced as a result of the separation ( Brown v . Brown , 2013 NBQB 369 (N.B. Q.B.) ; Fisher ; Berger v. Berger , 2016 ONCA 884 (Ont. C.A.), at para. 117 ; Mason , at para. 201). However, the courts have also emphasized that a mere disparity in the parties' respective incomes and overall financial circumstances does not in and of itself lead to entitlement to spousal support ( Berger , at para. 53 ).

As the British Columbia Court of Appeal stated in Lee v. Lee , 2014 BCCA 383 (B.C.

C .A.), marriage does [not] engage an automatic "tool of redistribution." Spouses must establish entitlement, and cannot simply assume that marriage creates a lifelong guaranteed income solely on the basis that their spouse earns a larger salary. [ 112 ] While disparities in income between spouses upon marriage breakdown can be a revealing indication of economic disadvantages inherent in the marriage role assumed by one party under the compensatory model of support, income discrepancy alone does not create non-compensatory entitlement.

Nor is there entitlement based solely on the desire of the lower income spouse to maintain the same standard of living enjoyed prior to marriage breakdown. There must be more to ground non-compensatory support. The presumed joint endeavor and the disadvantages that flow from its breakdown to a lower income spouse must equate to economic need. What constitutes need will vary according to the circumstances of the parties and the family unit as a whole. [ 113 ] After my review of the evidence and the authorities, I conclude that Mr.

Cowan is not entitled to non-compensatory spousal support beyond a limited-term support award to assist him in adjusting to a new standard of living. Any presumption that the marriage was a joint endeavor has been rebutted. More importantly, Mr. Cowan has not demonstrated sufficient need under the circumstances of this case to establish entitlement for an indefinite period. Joint Venture [ 114 ] The parties maintained separate bank accounts into which their respective pay was deposited. Ms. Cowan paid the bills and from the time they were married in 1993 until she completed her residency in 1999, Ms.

Cowan had access to Mr. Cowan’s bank account from which she would take funds to pay those bills. The couple had a line of credit which also contributed to paying their living expenses and from which additional money was drawn to maintain a basic standard of living. The line of credit also funded the down-payment on the matrimonial home as well as some early renovations. Once she completed her residency, she continued paying the bills without contribution from Mr. Cowan, with the exception of grocery purchases which Mr. Cowan undertook on a weekly basis for the family from his earnings.

Aside from that, his money was his to use as he pleased. He paid his own car loan and its operation expenses, as well as ongoing gym and golf fees. When the boys were old enough he paid their gym membership and in the last two years before separation, he was responsible for the cable bill. His earnings did not go towards the mortgage, house insurance, property taxes, nor to retiring the couples’ line of credit which had an outstanding balance in 1999 of approximately $100,000.00. This left significant income at his disposal, a level he no longer enjoys after separation.

From the evidence of both spouses, it is clear that for the last 15 or 16 years of their marriage, their finances were not integrated. [ 115 ] This separate economic arrangement went beyond finances. Ms. Cowan testified that as the years went by, Mr. Cowan was gone more and more, going to the gym, movies, spending time with friends and golfing a lot during the summers. He had a more extensive

and independent social life. Her work demanded more time than his and when she got home, she was focused on the children. The childcare gap was filled by the maternal grandmother. [ 116 ] Ms. Cowan gave extensive evidence of both boys’ medical issues over the years that included a neurological disorder, severs disease, celiac disease and herniated discs. Ms. Cowan testified that both boys missed significant periods of school due to these conditions. She would stay home from work to care for them when she could and she would stay up with them at night while they were ill and in discomfort. [ 117 ] Although Mr.

Cowan didn’t mention the children’s medical issues during direct examination, his description of them and the impact on their lives during cross examination and re-direct did not attribute the same significance portrayed by Ms. Cowan. Additionally, there were medical events that he did not remember. As way of example, Ms. Cowan testified that Sean’s auto-immune disorder flared-up for a second time in 2001 when he was eight years old. It lasted a few months and he missed a lot of school. Ms.

Cowan’s evidence was that she stayed home with him as much as she could to keep-up on his lessons and give him the support he needed. Mr. Cowan, on the other hand, had no recollection of this period. His evidence was that this particular medical issue for Sean cleared up at two years of age. [ 118 ] This may, in part, be explained by Ms. Cowan’s professional occupation but it does not explain it entirely. I conclude, rather, that the differing accounts are due in large part from the lack of social integration in their marriage. They were living separate lives as far back as 2001. In Mr.

Cowan’s own words, the marriage had been bad for 15 years prior to separation. [ 119 ] Whatever the marriage started out as, by the year 2000 the couple were not living a fully integrated life and for the 15 years that followed, they cannot be described as participating in a “joint venture”. As such, Mr. Cowan’s claim to non-compensatory support entitlement is not firmly grounded in the social obligation model of support where marriage is presumed to be an interdependent union.

From my perspective, this weakens his claim for entitlement but it is not determinative in the context of a 21.5 year marriage where both parties accepted this state of affairs and continued living under the same roof for an extensive period of time. Need [ 120 ] In C.(C.) v. C.(C.) , 2012 NLTD(G) 16, Justice Goodridge reasoned at paragraph 40 that under the non-compensatory support model: … a divorced or separated spouse with economic need is presumed to have suffered economically from the breakdown of the marriage and is entitled to assistance. The converse is also presumed.

A spouse not in need is presumed to have suffered no economic disadvantage from the breakdown of the marriage and is not entitled to spousal support. [ 121 ] Ms. Cowan has the means to pay support. She earns a substantially higher income than Mr. Cowan. That said, it is Mr. Cowan’s “means and needs” side of the analysis, combined with the lack of a joint venture for the last 15 years of marriage, that leads me to the conclusion that his entitlement to spousal support is marginal. [ 122 ] His need upon the breakdown of the marriage is not sufficient to warrant ongoing spousal support for an indefinite period.

His monthly expense statement was entered as an exhibit at trial. Aside from his mortgage payment, credit card debt and line of credit balance, he declared personal expenses of $4,708.00 per month or $56,496.00 annually. [ 123 ] On income of $92,430.00 and after applying deductions for union dues, income tax, CPP and EI premiums, Mr.

Cowan has $63,980.00 of annual net income at his disposal or $5,332.00 per month - a $614.00 monthly surplus over and above his monthly expenses without considering the mortgage and other debt he has accumulated since the breakdown of the marriage, most of which was associated with renovating his mother’s home and buying-out his sister’s beneficial interest. [ 124 ] The foregoing being said, Mr. Cowan is and will continue to experience economic hardship once his debt servicing costs are factored into the equation. His post-separation debt level is where his need exists. [ 125 ] Consideration of Mr.

Cowan’s means after marriage breakdown must involve an assessment of his capital base. Mr. Cowan will receive a substantial sum of money from his interest in the division of matrimonial property, even after adjustment for child support and special expense obligations up to April 2019; however, the sum for property division will not eliminate the debt he has accumulated since separation and meeting those debt obligations will continue to cause him economic hardship.

This need or economic hardship caused by debt servicing can be fully retired by both the matrimonial property division award and a limited-term spousal support award, sometimes referred to as a “transitional award”. By eliminating his post-separation debt, Mr. Cowan is left living in a home similar in value to that which he lived in prior to separation and with more than $600.00 a month of net income for discretionary spending over and above his expense needs.

This represents a post-separation standard of living that is not significantly different to that which existed before the marriage breakdown. [ 126 ] In Wawzonek v. Page , 2015 ONSC 4374 , Justice Pazaratz found the Respondent was entitled to a limited amount of spousal support to assist him in adjusting to a new standard of living (a lump sum award based on three years support after 28 years of marriage).

Discussing the law on “transitional” support payments, Justice Pazaratz wrote: 214 Spousal support has been ordered in a number of cases where an independent - but financially weaker - spouse has required assistance transitioning to a lower standard of living. Although notably, courts have sometimes disagreed as to whether to call it "transitional support". 215 In Racco v. Racco , 2014 ONCA 330 (Ont. C.A.) the Ontario Court of Appeal agreed a lump sum payment was appropriate to allow the wife to adjust to a reduced standard of living. But the court discouraged use of the term "transitional":

[39] Transitional support is not a category of support. It is a word that is sometimes used to describe a spousal support award that is for abrief period of time, in other words, a short limited-term support award. It was the word "transitional" that appears to underlie theappellant's submission that the amount of the award was excessive.

Since the phrase "transitional support" is vernacular rather than arecognized legal term, it is generally not advisable to use it. [40] A limited-term support award is generally designed to enable the recipient, after a short term marriage, to either achieve self-sufficiency or adjust to a lower standard of living. According to Moge, limited-term support should be rarely awarded in marriages oflong duration. Where limited-term support is awarded after a long term marriage, particularly one with children, the term must be longenough to satisfy the objectives of the Divorce Act. 216 In Rioux v.

Rioux (2009), 2009 ONCA 569 , 97 O.R. (3d) 102 (Ont. C.A.) the Court of Appeal adopted the term, stating: Ms. Rioux is entitled to further non-compensatory transitional support to soften the impact of the decrease in the standard of livingcaused by the marriage breakup: see Fisher v. Fisher (2008), 2008 ONCA 11 , 88 O.R. (3d) 241 217 Similarly in Roseneck v. Gowling (2002), (ON CA), 35 R.F.L. (5th) 177 (Ont.

C.A.) the Court of Appealincluded the wife's "greater need for transitional support" as one of the factors and objectives to be considered. 87 In this circumstance, Professor Rogerson's observation in "Spousal Support Post-Bracklow: The Pendulum Swings Again?" is apt: Such discrete [limited-term] obligations may also arise in longer relationships where both parties have worked throughout therelationship and the lower-income spouse is understood to have only a limited claim to non-compensatory, transitional support to cushionthe drop in standard of living occasioned by the marriage breakdown. (p. 259). 218 In Lee v.

Lee, 2014 BCCA 383 (B.C. C.A.) the British Columbia Court of Appeal stated a party who experiences a marked declinein standard of living due to separation ought to receive some financial assistance in adapting to their new situation. This is embodied inthe concept of a "transitional" support award. The husband was awarded $17,500.00. [127] This is a case where limited-term support is appropriate and I exercise my discretion to make such an award in a manner thatequitably alleviates the adverse consequences of the marriage breakdown. Transitional support should be sufficient in duration andquantum to address Mr.

Cowan’s post-separation debt. I am satisfied that awarding a lump sum calculated pursuant to the SpousalSupport Advisory Guidelines will enable Mr. Cowan to smoothly transition to self-sufficiency. A duration of five years of transitionalsupport commencing when Mr.

Cowan moved out of the matrimonial home and having a quantum in the mid-range produces thefollowing DivorceMate calculations: 2015 May to December (8 months) 27,536.00 2016 January to December (12 months) 41,466.00 2017 December to November (11 months: date of revised child support tables) 42,449.00 2017 December (1 month) 3,840.00 2018 January to December (12 months) 46,080.00 2019 January to April (4 months: date when Luke completed post-secondary) 15,552.00 May 2019 to April 2020 (12 months) 59,250.00 Total: $236,173.00* (* mid-range lump sum, midpoint after-tax cost/benefit with no discount rate applied) [128] This amount shall be paid to Mr.

Cowan within three months of this decision being issued. [129] To further promote self-sufficiency in the longer-term and in consideration of the fact that Ms. Cowan has not claimed a divisionof Mr. Cowan’s teacher’s pension and severance benefits, it is also appropriate to deviate from the presumption of equal division for

these particular assets. As such, there shall be no division of Mr. Cowan’s pension and severance benefits in favour of Ms. Cowan. [ 130 ] This limited-term support award sufficiently addresses the non-compensatory objectives of the Divorce Act in the context of a couple that were not living fully integrated lives for the last 15 years of their marriage. It relieves the economic hardship Mr. Cowan has encountered getting established post-separation and it promotes his ability to be self-sufficient in the longer term.

It puts him in a position and with a standard of living not significantly different to that which he was accustomed prior to the breakdown of the marriage. A clean break is possible in the circumstances of this case. [ 131 ] Given my determination on transitional spousal support, I must return to the issue of Mr. Cowan’s proportional share of tuition expenses for the children discussed under Issue #3. In 2015, his proportional share was 34.2 percent, 2016 – 35.5 percent, 2017 – 34.5 percent, 2018 – 34.4 percent and 2019 – 34.6 percent. Of the total tuition expenses presented at trial ($12,867.24), Mr.

Cowan is responsible for $4,454.49, which amount is payable to Ms. Cowan. [ 132 ] Given the mixed success for both parties, each party shall bear their own costs. order [ 133 ] Ms. Cowan’s balancing payments to Mr. Cowan: 1) Within 60 days of this decision, Ms. Cowan shall pay Mr. Cowan, $152,250.00 for his share of the matrimonial home. Failing agreement on current value, the matrimonial home shall be appraised within 30 days of this decision, with the transfer and corresponding balancing payment for Mr. Cowan’s one-half interest in the latest

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