2012 QCCA 1966, 2012 QCCA 1966

Droit de la famille — 123147 2012 QCCA 1966 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-022822-126 ( 500-12-309075-111 ) MINUTES OF THE HEARING DATE: November 1, 2012 CORAM: THE HONOURABLE PAUL VÉZINA, J.A. NICHOLAS KASIRER, J.A. MARIE ST-PIERRE, J.A. APPELLANT ATTORNEY(

S) R. B. Mtre Guylaine Duplessis Mtre Tara Etcovitch DUPLESSIS, ROBILLARD RESPONDENT ATTORNEY(

S) E. J. Mtre Miriam Grassby GRASSBY & ASSOCIÉS Mtre Neil Stein Stein & Stein inc. IMPLEADED PARTIES ATTORNEY(

S) H. B. [COMPANY A] [COMPANY B] THE TRUSTEES OF THE R. B. FAMILY TRUST THE TRUSTEES OF THE B. FAMILY AIM INVESTMENT TRUST THE TRUSTEES OF THE H. B. FAMILY TRUST REGISTRAR OF THE LAND REGISTRY OFFICE OF THE REGISTRATION DIVISION OF TERREBONNE Mtre Karim Renno IRVING, MITCHELL, KALICHMAN On appeal from a judgment rendered on June 21, 2012 by the Honourable Justice Daniel H. Tingley of the Superior Court district of Montreal. Motion for leave to appel «de bene esse» referred to the Court by the Honourable Allan R. Hilton, J.A.

NATURE OF THE APPEAL : Divorce – provisional measures Clerk: Marcelle Desmarais Courtroom: Antonio-Lamer HEARING 14 h 00 Argumentation par Me Guylaine Duplessis sur la requête pour permission d'appeler. 14 h 32 Argumentation par Me Karim Renno. 14 h 39 Submissions by Mtre Miriam Grassby. 15 h 04 Réplique par Me Guylaine Duplessis.

15 h 10 End of arguments. 15 h 10 Suspension. 15 h 15 Resumption. BY THE COURT: Judgment – see page 4. Marcelle Desmarais Clerk BY THE COURT JUDGMENT [ 1 ] E. J. commenced divorce proceedings against R. B. in 2011. Mr. B. seeks to appeal from an interlocutory judgment of the Superior Court, District of Montreal (the Honourable Daniel Tingley presiding), rendered on June 21, 2012, in which a motion for provisional measures (sometimes called "interim order" in divorce matters) brought by Ms. J. was granted in part. [ 2 ] Mr.

B. inscribed the judgment in appeal, alleging the judge erred in the amounts awarded for interim child support, interim spousal support and a provision for costs. Mindful that his appeal might require leave, he also filed a de bene esse motion for leave to appeal. The latter was presented before our colleague Hilton, J.A. in chambers who chose to refer the motion to the Court. [1] [ 3 ] Mr. B. was right to ask for leave to appeal.

In Droit de la famille – 121718 , [2] this Court held that appeals from interlocutory judgments in divorce matters require leave in accordance with the criteria set forth in articles 29 and 511 C.C.P. That case did not bear on interim support orders for children of the marriage or for a spouse. But the Court cited with approval Elgner v. Elgner , [3] a judgment of the Ontario Court of Appeal, in which an interim support order issued under

section 15.2 of the Divorce Act , R.S.C. 1985, c 3, was held to require leave. Suffice to say that we find the combined reasons in Droit de la famille – 121718 [4] and Elgner [5] persuasive such that leave is required here.

The inscription in appeal is therefore without object. [ 4 ] In Elgner , the Ontario Court of Appeal noted further that reasons of sound judicial policy suggest that interim appeals in family matters should generally be discouraged because, in the words of Gillese, J.A., they "cause the parties additional expense, emotional anguish and delay". [6] Echoing the same sentiment, this Court wrote the following in Droit de la famille – 121718 : [22] De l'avis de la Cour, les propos que tient la Cour d'appel de l'Ontario dans cette affaire (dont elle fut elle-même saisie par voie de requête pour permission d'appeler) sont transposables à la situation québécoise, pour des raisons analogues.

Non seulement le texte et l'esprit des paragraphes 1 et 6 de l'

article 21 de la

Loi sur le divorce imposent-ils, en définitive, cette conclusion, mais aussi les préoccupations liées à la philosophie sous-jacente à la loi ainsi que les considérations de politique judiciaire relatives tant à la rapidité des instances de divorce qu'au souci d'éviter aux parties un débat stérile, mais anxiogène, et des coûts, tant personnels que financiers, qui peuvent se révéler inutiles . [Emphasis added.] [ 5 ] The policy considerations that serve to discourage interlocutory appeals in like matters are relevant to this case. That said, the appeal for which Mr.

B. seeks leave remains possible under the Divorce Act . He has the task of convincing the Court that his application for leave satisfies the criteria in

article 29 C.C.P. and that the pursuit of justice requires that leave be granted. *** [ 6 ] The facts can be briefly stated. [ 7 ] Married under the regime of partnership of acquests in 1991, the parties have two daughters and a son, all teenagers. The parents are both highly educated. Ms. J. stopped working outside the home some time after the birth of their first child in 1995. Mr. B. began

working in his father’s metals business shortly after the marriage. In 2007, he became president of an affiliated company within the group of companies controlled by his father. [ 8 ] The parents separated in January 2011. The children live with Ms. J. in the family residence. Mr. B. has purchased a home nearby. [ 9 ] The judge described the parties’ lifestyle during the marriage as follows: [19] The Parties and their children have enjoyed a lifestyle fuelled largely by revenues that less than 1% of Canadian families earn.

Mother has learned to spend all that comes her way and Father could not be accused of denying her anything, at least until the separation. The fuel for this lifestyle over the last five years has required in excess of $2 million per year to maintain. Grandfather contributed to the furnishing of the family residence and has paid all the costs of the [residence A]. [ 10 ] The judge wrote the following about Mr. B.’s income, with reference to a disputed $1.9M sum paid to him by his holding company in 2011: [12] He remains as President of [Company C] to this day, earning an annual salary of $565,000.

He reports to a Board of Directors composed of Grandfather, his uncle and himself. In the last five years his earnings (comprising salaries, bonuses, dividends and offshore payments) from [Company C] have averaged $1,2 Million annually excluding any allowance for expenses reimbursed by [Company C] during the period. In 2011, he received a salary of $549,278, augmented by an extraordinary dividend of $1,9 million paid to him by his holding company in May 2011. He did not receive any bonuses from [Company C] for 2010 or 2011. In 2007, some $300,000 was deposited to an offshore account belonging to Father.

As at December 31,2011, its value was $324,000. Father explains that the deposits made to this account were commissions paid to him by an Asian customer. [ 11 ] Until early May of 2011, Mr. B. owned shares in various companies controlled by his father. He is also trustee and beneficiary, with others, of a family trust which held very substantial assets during part of the marriage. On May 6, 2011, Mr. B. divested himself of certain assets, as did the trust. On this point, the judge wrote: [17] Since May 6 th , 2011, at Grandfather’s insistence, Father has (

a) allowed the [Family Trust] to divest itself of over $30 million worth of assets for no apparent consideration and (

b) caused his holding company to sell its shares of AIM Inc. and AIM (USA) to Grandfather’s holding company for aggregate consideration of $1,9 million. In addition, on May 9 th , 2011, Father sold his voting shares of [Company C], representing 50% of the voting rights, to Grandfather for $100. [18] Thus in the space of less than one week Father disposed of assets acquired from his labours and the generosity of Grandfather valued at some $32 million gained over some 20 years.

There will no doubt be a reckoning when this matter is heard on the merits. [ 12 ] In May of 2011, Gibeau, J. rendered an interim order that was renewed until the judgment on provisional measures now on appeal. Gibeau, J. granted temporary custody of the children to Ms. J. with liberal access rights to Mr. B.. Ms. J. was awarded exclusive use of the family residence for her and the children. Mr. B. would pay all the expenses relating to the residence and for the children’s private schooling. He was ordered to pay Ms.

J. $6,000 per month as support for the children and $2,500 per week as spousal support and to pay the costs associated with the lease of her car. She would also receive a sum of $30,000 to be characterized by the judge on the merits as either an advance on her share of the partition of the matrimonial regime or a provision for costs. *** [ 13 ] After an 11-day hearing, Tingley, J. issued orders as provisional measures designed to allow for the status quo for the family for the period running up to judgment on the merits.

He adjusted the amounts ordered by Gibeau, J. in the judgment now on appeal as follows: • basic child support was adjusted to $175,144 per year, in addition to the special expenses he undertook to pay for the children's private school education and related costs, plus any orthodontic or medical expenses, upon proof of their cost (which would be at a minimum of another $65,004 per year pursuant to the order of Gibeau, J.); • spousal support was adjusted to $156,000 per year; • Mr. B. was ordered to pay a provision for costs of $250,000 within 30 days. [ 14 ] At the invitation of Mr.

B., Tingley, J. fixed the amount of child support based on the applicable child support guidelines. In respect of the "disposable income" and the "annual income" of Mr. B. relevant to the calculation of the amount to be paid under the applicable law, the judge wrote: [34] The general rule to establish the support payable in Québec by parents for their children is found in

article 3 of the Regulation Respecting The Determination of Child Support Payments. 13 This rule requires a parent to contribute to his or her children's needs in the proportion his or her "disposable income" bears to that of the other parent as fixed by annual tables all in accordance with the Child Support Determination Form. Such contribution "is presumed to meet the needs of the [children] and to be in proportion to the means of the parents". 14 [35] The expression "disposable income" means "annual income" less a basic deduction of $10,100. and a deduction for union and professional dues.

The term "annual income" means "income from any source." 15 And income from any source includes dividends, even "extraordinary" dividends. 16

[36] Basic child support payable by a parent may be increased "having regard to specified expenses relating to the [children]"17 suchas private school fees, summer camps, orthodontics and music lessons. A Court may increase or reduce support payments "if it is warranted by the value of either parent's assets or the extent of the resources available to the [children]".18 […] [37] In 2011, Father’s income from all sources amounted to at least $2,5 million,19 including a salary of $549,000, a dividend of $1,9million and vacations paid by Grandfather of an indeterminate amount.

Applying most of Father’s 2011 income to the 2012 QuebecTables indicates that Father should contribute a basic annual amount for child support in 2012 of $175,144 ($26,300. + 6,5% X $2,2899 million).20 [38] Special expenses for the children include private school fees, orthodontics, tutoring, summer camps and music lessonsaggregating about $80,000. annually. [39] While it is still too early to determine what Father’s child support obligations will be in 2013, it is unlikely that its computationwill include any dividend from his holding company.

That vehicle is now an empty shell. 15 [...] in particular wages, salaries and other remuneration, support paid by a third party and received for one's own needs,employment insurance benefits, parental insurance benefits and other benefits granted under a statutory pension or compensation plan,dividends, interest and other investment income, net income from rental activities and net income from the operation of a business orfrom a self-employment, notwithstanding the foregoing, this definition excludes government family transfers, last-resort financialassistance and any sums granted by the Minister of Education and received under a financial assistance program for educationexpenses. 16 Ibid. 17 See

article 587.2 C.C.Q. 18 Ibid, second paragraph of

article 587.2 C.C.Q. 19 Father's 2011 income tax returns indicate total income of over $3 million comprising dividends of $2,5 million plus his salary. 20 That is, $2,5 million minus $210,100. [15] As to the amount of spousal support, the judge cited the factors and objectives set forth in ss. 15(4), 15(5) and 15(6) of theDivorce Act. He then wrote: [43] Father’s illness appears to be behind him.

If he performs well as President of [Company C], he is entitled to expect the kind of bonus he received in the years preceding 2010.22 The Court is confident Grandfather will reward his son appropriately for strongperformance in line with his past practice and not deny him simply to spite Mother. [44] In the meantime, the Court will assess Father’s ability to pay spousal support in light of his average annual earnings of $1,2 million over the last five years, including specifically the extraordinary dividend he paid himself from his holding company last year.23 22 On the issue of the inclusion of bonuses for purposes of fixing spousal support, see Linton v.

Linton, (ON CA),1990, 30 R.F.L. (3d) 1, at p. 28. 23 See paragraph [12] above. [16] The judge then considered Ms. J.’s proposed budget. He estimated this at $31,739 which was, in his view, "in line with thelifestyle the parties have heretofore enjoyed" (para [45]). He made reductions based on expenses for the family residence included inamounts payable for the children, and reduced further some requests for restaurant meals, clothing, therapy and the like. Subtracting inparticular taxes and child support from the figure of $1.2M he fixed as the amount of Mr.

B.’s income available for spousal support, thejudge concluded as follows on this point: [49] The Court will divide what is left equally and invite Father to pay Mother an annual alimentary allowance as of January 1st, 2012of $156,700. net of income taxes pending a hearing of this matter on the merits. This allowance may have to be adjusted upwards if childsupport is reduced in 2013. [17] Finally amongst the matters relevant for this motion, the judge awarded Ms.

J. a substantial provision for costs, although one thatwas far less than that which she had requested: [51] Mother wants to prepare for full-scale warfare, given the antics of Grandfather and Father in the last year. Her budget does notinclude any provision for legal or expert fees that she will incur to protect her interests in the parties' family patrimony and partnership ofAcquests. [52] She asks for more than $700,000. for a provision for costs to gear up for the battles to come. If the parties fail in the very short

term to resolve their disputes, Mother is going to require financial assistance to ensure a level playing field.

Father is the only source forsuch costs at this time. [53] For starters, the Court will invite Father to pay Mother a provision for costs of $250,000. payable within the next 30 days.24 Perhaps he can find these funds from the $500,000. the Court has left off the table from Father's actual revenues in 2011. 24 Bearing in mind the criteria for granting requests for provisions for costs within the framework of the "nouvelle culture judiciaire"reflected in Articles 4.1 and 4.2 C.C.P., which are summarized by Madam Justice Piché in A. c. B., 2006 QCCS 2850 , 2006Q.C.C.S. 2850 at paragraphs [238] to [279] inclusive.

See also E.L. c. G.B.; C.A.Q. 200-09-007305-110; 2011-09-14, atparagraph [8]. *** [18] In the motion de bene esse for leave, Mr. B. alleges that the judge erred in his calculation of his income for the purposes ofcalculating child support, spousal support and the provision for costs. [19] Specifically, he argues that the judge erred in law in characterizing the $1.9M sum realized from the sale of shares as incomerather than as an asset to be divided between the parties on the merits. The funds were paid to Mr.

B. upon the sale of shares – capitalproperty – and as a result should not be characterized as income even if they were paid as a dividend. He claims that the judgecharacterized the $1.9M dividend inconsistently, calling it income in some portions of the judgment and property elsewhere. He says thejudge failed to consider that the dividend was used to pay a debt for part of family expenses. Mr. B. says the judge should havecalculated his income based only on his $549,000 salary alone. [20] Secondly, the judge is said to have erred by using different income amounts for Mr.

B. to establish the child support, spousalsupport and the provision for costs he owed. [21] In addition to miscalculating the debtor's means, Mr. B. alleges further that the judge miscalculated Ms. J.'s needs and the amountshe should be bound to contribute to them. [22] Finally, Mr. B. argues that the effect of the judgment is to place a portion of the burden for paying alimentary support indirectlyon the mis-en-cause, his father Mr. H. B.. He says that H. B. owes no alimentary obligation in law to Ms. J. or to his grandchildren.While the judge formally recognized this in his reasons, R.

B. argues that it is plain that the income amounts determined by the judgeindirectly oblige H. B. to provide amounts over and above his son's salary to make up the shortfall of the various alimentary obligations. *** [23] Does an appeal lie pursuant to the criteria set out in the first paragraph of

article 29 C.C.P.? Specifically, did Tingley, J. "orderthe doing of anything which cannot be remedied by the final judgment"? [24] It is of course a well-recognized principle that the judge called upon to decide on alimentary support on the merits of a divorceaction is not bound by the interlocutory decisions bearing on provisional support. [25] Mr. B. argues that the support obligations imposed on him are so onerous that they threaten his financial well-being in a way thatcannot be righted in the final judgment.

Because his real income is far lower that that attributed to him by the judge, he says that he willhave to sell off assets in order to meet his provisional support obligations.

In this sense, he argues, the effect of Tingley, J.'s judgmentcannot be remedied on the merits. [26] When leave to appeal is required in alimentary matters, there is some authority for the proposition that a provisional alimentaryorder is susceptible of appeal because it meets the leave requirement in 29 C.C.P.[7] Because courts generally do not make retroactivealimentary orders on the merits,[8] there could well be cases in which such a excessive interim child support would be considered assomething that cannot be remedied by the final judgment.

This could be true as well in circumstances where a provision for costs isordered on an interlocutory basis to an impecunious creditor where there is no realistic likelihood of repayment.[9] While, in theory,judgments on provisional measures can be remedied on the merits, there are thus circumstances where this is not the case in practice.Whether or not an interlocutory alimentary order has a definitive impact on the proceedings is something that would have to be decidedon the facts of a given case. [27] In the present instance, both parties allege that the other has substantial assets.

This suggests that a reimbursement of anoverpayment of support could be ordered on the merits as a practical matter although, even in a well-to-do family, a court would likelynot do so if reimbursement of child support would be the source of hardship to the children. [28] In any event, it is not necessary to decide the matter under

article 29 C.C.P. here. Even if one were to assume, for the purpose ofargument, that the judgment ordered something that could not be remedied, Mr. B. has failed to demonstrate that the "pursuit of justice",within the meaning of

article 511 C.C.P., requires that leave be granted. [29] First, appellate courts show a high degree of deference to provisional alimentary orders. As noted by this Court in Droit de lafamille – 092415, "une ordonnance alimentaire provisoire ne sera pas infirmée en appel à moins que des circonstances trèsexceptionnelles et urgentes (injustice manifeste, erreur grossière et déterminante) ne transparaissent du dossier".[10] It is the Court'sview that Mr.

B. has failed to show such an error in the judgment of the Superior Court. [30] We are not satisfied that the judge erred in a manner that would allow the Court to intervene in including the $1.9M dividend inMr. B.'s income for the purposes of support. The judge did not fail to recognize it as an extraordinary dividend, or mistake the fact thatthe funds originated from the sale of capital property. He exercised his discretion to include it in income, citing in particular

article 587.2

C.C.Q which allowed the court to increase the level of child support payable where warranted by the value of Mr. B.'s assets. He cited as well ss. 3 and 9 of the Regulation respecting the determination of child support payments which grant courts a wide discretion to include different sums in annual income, including "dividends […] and other investment income". While the proceeds from the sale of shares are not typically considered "investment income", there are circumstances in which they may be properly construed as "disposable income" for the purposes of identifying funds available for paying support.

The judge exercised the discretion afforded to him by law on this point. His various references to the $1.9M sum were not inconsistent in a manner that would cause definitive prejudice to Mr. B.. [ 31 ] The fact that Mr B. had different sources of revenue over the years, including salary, dividends, off-shore payments, bonuses, and payments of different sorts from his father and employer, meant that relying on his formal salary as an indicia of income to the disadvantage of creditors of support would have been inappropriate.

It would have been incongruous to observe a $2M lifestyle curtailed to fit a reduced income of $550,000, especially given the post separation "spending spree" undertaken by Mr. B. to which the judge referred (para [27]). We are satisfied that the judge exercised his discretion properly under the applicable law in deciding to include the extraordinary dividend in income. [ 32 ] It is true that the judge used different amounts of income to calculate support due to his children and to his spouse. But in doing so, the judge respected the applicable rules and made his reasoning most plain. Mr.

B. has shown no reviewable error in this respect. [ 33 ] The judge did not impose an alimentary obligation on H. B.. Indeed he wrote that as grandfather and father-in-law, H. B. has no obligation to support them. The judge sent a plain message to the parties in paragraphs [30] and [31] that they could not rely on the generosity of Mr. B.. The judge did not ignore the funds that H. B. made available to his son and employee that had served to finance the lifestyle to which R. B., and by extension his immediate family, had become accustomed. Even in respect of the holidays referred to in paragraph [37], these are R.

B.'s obligations, not those of his father. Again, no reviewable mistake has been shown here. [ 34 ] Counsel suggested that the judge failed to consider Ms. J.'s resources in establishing her needs and means. Yet the judge did reduce the amounts she asked for as support and as a provision for costs. He noted that Ms. J. does not work outside the home, but did mention that she should return to work in the near term. In respect of the current level of support awarded to her, considering especially its provisional character, no error has been shown.

This is true as well for the provision for costs which the judge fairly fixed with an eye to Mr. B.'s "actual revenues in 2011" as revealed by his tax returns (para. [51]). [ 35 ] In a complicated financial setting in which the parties bitterly disputed the amount and character of the funds available to them, the judge exercised his discretion judiciously to set provisional alimentary support. His task, properly acquitted, was to allow the status quo to be maintained at this stage of the proceedings. [ 36 ] The pursuit of justice does not require leave to be granted.

Because of the discretionary character of the finding of the judge, and the provisional nature of his judgment, an appeal would have no reasonable chance of success if leave was granted. FOR THESE REASONS , the Court: [ 37 ] DISMISSES the motion for leave to appeal; [ 38 ] Without costs, given the nature of the dispute. PAUL VÉZINA, J.A. NICHOLAS KASIRER, J.A. MARIE ST-PIERRE, J.A.