2023 MBKB 9, 2023 MBKB 9

Date: 20230118 Docket: FD 15-01-11826 (Winnipeg Centre) Indexed as: M.M. v. B.M. Cited as: 2023 MBKB 9 COURT OF KING’S BENCH OF MANITOBA FAMILY DIVISION B E T W E E N: M.M., ) Len Fishman ) for the petitioner petitioner, ) ) - and - ) Dean R. Kropp, ) for the respondent B.M., ) ) respondent. ) JUDGMENT DELIVERED: ) January 18, 2023 MacPHAIL J. Index Introduction . 1 Trial History . 1 Background of the Parties 6 Spousal Support 13 Introduction . 13 Expert Evidence – Physicians’ Remuneration . 16 Parties’ Incomes 27 a) 2015 . 27

b) Revenues from Brain Matters Inc. 31 Petitioner’s Income and Income Potential 33 Respondent’s Income and Income Potential 45 Comparison of the Parties’ Incomes and Income Potential 49 Respondent’s Hours of Work . 50 Respondent’s Health Issues 56 Petitioner’s Entitlement to Spousal Support 60 Impact of the Mehrieh . 72 Quantum and Duration of Spousal Support 79 Breach of the Separation Agreement and Breach of Trust 87 Pleadings 88

Brain Matters Inc. and the Separation Agreement 90 Do the provisions of paragraph 10 constitute a binding agreement or an agreement to agree? . 95 Alleged Breaches by the Respondent 99

a) Appointing counsel and an accountant for the corporation and related steps requiring professional assistance . 101

b) Changing the corporation’s bank account to one requiring joint signatures 105

c) Informing McGill that the corporation owned his interests in Patent #1 and Patent #2 106

d) Acting unilaterally, without corporate authorization, in negotiations with McGill and dealing with funds received from McGill, oppressing the other shareholders and breaching his trust obligations 107 Arbitration Process 114 Respondent’s Explanations for his Actions 119

a) Petitioner’s alleged non-compliance with the provisions of the Separation Agreement respecting the Mehrieh and Iranian divorce . 119

b) Effect of the non-disclosure agreement 126

c) Respondent acted within his authority as “CEO” 128

d) Respondent’s actions benefitted the corporation and its shareholders ... 129 Conclusions Respecting the Respondent’s alleged Breaches of the Separation Agreement and Breach of Trust 131 Damages 135 Other Claims 141 Appendix A - Endorsement issued December 18, 2020 Appendix B - Endorsement issued May 25, 2021 Introduction [ 1 ] In addition to claims for divorce, this trial involved the petitioner’s claims for spousal support and respecting the respondent’s alleged breaches of the parties’ Separation Agreement, including breach of trust.

Trial History [ 2 ] This trial took place at various periods over a year and a half. [ 3 ] When the trial began, other than a divorce and costs, the sole issue was the highly contested spousal support claim by the petitioner. All the other issues then pled, including property and child support, had been resolved in the Separation Agreement executed by the parties on January 6, 2020 (the “Separation Agreement”). [ 4 ] At the beginning of the second week of trial, the proceeding was adjourned for continuation two months later due to the illness of one counsel.

With the consent of both parties, the claim for divorce was severed and, the necessary evidence having been provided, a Divorce Judgment was granted on January 22, 2020, the day the proceeding was adjourned. [ 5 ] The resumption, conduct, duration and finalization of the trial were significantly impacted by the COVID-19 pandemic and the Court’s important directives aimed at reducing the spread of that virus. The trial continuation week scheduled for late March 2020 was cancelled in accordance with one of those directives.

The proceeding was placed on a Trial Assignment List and the continuation week subsequently rescheduled for December 8 to 11, 2020. [ 6 ] During the intervening ten months additional events occurred. [ 7 ] On November 3, 2020 counsel and the parties appeared before me by teleconference to discuss various procedural issues relating to the trial continuation.

Given the stage of the proceeding, the issues then involved, the need for updated evidence from the petitioner and another witness, and the number and nature of the witnesses the respondent wished to call, it was apparent that four days of trial continuation would be insufficient. A second trial continuation week was scheduled for December 15 to 18, 2020. [ 8 ] Counsel and the parties thereafter attended further case conferences with their case conference judge by teleconference on

November 13 and 19, 2020.

By the first date, a further COVID-19-related Court directive had issued that resulted in the first of the two December trial continuation weeks being cancelled; the second week, that scheduled by me on November 3, 2020, remained in place. [ 9 ] As contemplated at the November case conferences, at a December 3, 2020 teleconference hearing I considered the petitioner’s requests for leave to amend her pleadings to add claims respecting the respondent’s alleged breaches of the parties’ Separation Agreement, including breach of trust, to resume her examination for discovery of the respondent and for further financial disclosure.

I also considered the issues of a further adjournment and the need for additional trial time. I advised counsel of my decision that day. [ 10 ] I allowed the petitioner to make certain amendments to her Amended Petition for Divorce, and the respondent to amend his Amended Answer and Petition for Divorce to respond to her new claims (which he did).

I also allowed the respondent to amend his pleading to include claims relating to any alleged breaches of the Separation Agreement by the petitioner, should he wish to do so. (The respondent did not amend his pleading to make such claims but, as was discussed as a possibility during the teleconference hearing, he raised same as “defenses” to, or explanations for, any alleged breaches on his part.) I directed that the petitioner could file a Reply if the respondent amended his pleading (which she did).

Filing deadlines were set. [ 11 ] I allowed the examinations for discovery of each party to resume respecting new claims advanced by either party in the re- amended pleadings, as well as respecting events and issues that occurred, or situations that changed, after the adjournment of the trial on January 22, 2020.

I declined to make a further financial disclosure order given the various other discovery options then available. [ 12 ] Given the orders I made respecting amendments to pleadings and continuation of examinations for discovery, and the time needed for updated evidence and evidence relating to the new claims from the petitioner, and for the respondent’s evidence, it was clear more than one trial continuation week would be needed.

Not only would the one remaining trial continuation week provide insufficient time for presentation of that evidence, requiring scheduling of additional week for some later time, the scheduled commencement date would not provide sufficient time for amendment of pleadings and conduct of the anticipated continuations of examinations for discovery.

For these reasons the one remaining December trial continuation week was cancelled and two separate trial continuation weeks were scheduled, one in each of April and May of 2021. [ 13 ] As I advised counsel I would, I subsequently provided brief written reasons for the decisions I made on December 3, 2020, in an Endorsement issued December 18, 2020 (attached as Appendix “A” to this judgment [1] ). [ 14 ] The trial continued as scheduled in the spring of 2021, with counsel, the parties and additional witnesses attending via MS Teams videoconference.

The petitioner and one of her witnesses gave further evidence, in particular updated evidence with respect to income issues, and her evidence with respect to her new claims. [ 15 ] Despite the best efforts of counsel and the parties to complete the trial during these two weeks of trial continuation, that did not occur, in part due to the additional time needed because the matter was proceeding by videoconference. Given the issues in this proceeding, a number of large binders of potential exhibits (some exceedingly lengthy) were prepared and submitted by counsel.

Time was required to provide directions respecting the conduct of the trial because it was proceeding via videoconference, including directions to witnesses at the commencement of their testimony. Time was consumed ensuring counsel, the witness and the Court were all looking at the same document, moving from one binder and document within a binder, to another and ensuring all intended exhibits were marked as such. Time was also required to address the occasional technical issues that arose, some of which were resolved by participants leaving and re-entering the videoconference hearing.

In the end, however, while significantly more time was needed for this proceeding than would have been the case with a wholly in-person trial, videoconferencing technology was a valuable tool and of critical importance in enabling the evidentiary portion of this proceeding to be completed. [ 16 ] By the end of the second trial continuation week, the petitioner’s case was finished and the respondent had given his evidence, leaving testimony from his four witnesses remaining.

Additional trial days were scheduled for June of 2021. [ 17 ] The respondent sought leave to present the direct evidence of three of his remaining four witnesses (Dr. Pacin, Dr. Kaderali and Dr. Schmidt) by affidavit and to have the two physicians who were involved in his care testify as “participant experts”.

Rather than addressing those issues at the beginning of the June trial continuation days, a teleconference voir dire was scheduled and proceeded on May 13, 2021. [ 18 ] I issued an Endorsement Sheet on May 25, 2021 allowing the three witnesses’ direct evidence to be provided by affidavit, qualifying the two treating physicians as experts and granting leave for them to testify at the trial continuation. After reviewing the law with respect to “participant experts” (including in Manitoba), I determined that Dr. Pacin and Dr.

Kaderali each met the criteria to be considered, and to testify as, a “participant witness”. I further considered the application of s. 50 of The Manitoba Evidence Act , C.C.S.M. c. E150 , respecting medical reports and evidence of doctors, noted there had been compliance with same insofar as Dr. Kaderali was concerned, and granted leave for both treating physicians to testify at the trial continuation. A copy of that Endorsement is attached as Appendix “B” to this judgment. [2] [ 19 ] After the evidentiary portion of the trial concluded, timelines were set for counsel to submit written arguments.

Counsel each submitted lengthy, comprehensive written arguments and books of authorities, all of which I carefully reviewed in reaching this decision. Because of the various periods of time that elapsed between the commencement, continuations and conclusion of the trial, and the submission of the final reply argument, reviews of lengthy transcripts were also conducted, in addition to the extensive binders of documents and other documents filed as exhibits.

Unfortunately, portions of each counsel’s written argument referred to matters that did not appear to have been part of the evidence presented at trial or contained inaccurate references to exhibit numbers or summaries of evidence, requiring even further review to confirm whether such evidence had been presented at trial. This further complicated, and necessitated additional time for, determination of an already complex case. Background of the Parties

[ 20 ] The parties were both born in Tehran, Iran; the petitioner in late 1971 and the respondent in mid-1972. [ 21 ] After meeting each other during their time in medical school, the parties were married in June of 1993. At the time of their marriage, they entered into a marriage contract (“Mehrieh”) requiring the respondent to pay, on demand, a certain number of gold coins to the petitioner. [ 22 ] The parties each obtained a medical degree in 1997 from the Tehran University of Medical Sciences, described by the petitioner as the top medical school in the country.

The petitioner worked for several years thereafter as a clinic director and doctor, and the respondent as a clinic doctor, earning comparable incomes. [ 23 ] The parties’ son was born in December of 1998. The petitioner took several months of maternity leave, and arranged her work

schedule so that she could return home to nurse their infant child. The parties’ families supported their childcare obligations at various times. [ 24 ] The parties’ families also supported them in other ways. Each party was gifted a piece of real property from their family around the time of their marriage. The properties were eventually sold and the proceeds of sale used by the parties. [ 25 ] The petitioner and the respondent are both highly intelligent, extremely well educated, driven and ambitious individuals.

They both wanted to leave Iran and pursue further formal education and careers in another country, ideally in the brain sciences field, an area in which they each had a keen interest. [ 26 ] Both parties took time off work to improve their English language skills and prepare for the Graduate Record Examination and the English language proficiency examination required by various educational institutions outside of Iran.

Completion of these examinations necessitated travel to other countries. [ 27 ] The petitioner and the respondent each played different, but complementary, roles with respect to their efforts to obtain entry to a graduate study program outside of Iran. The petitioner, who had greater fluency in English, completed the applications and other documentation, and the respondent worked to obtain letters of recommendation from individuals with whom they had worked in Iran. [ 28 ] The petitioner was the first to obtain a graduate study position outside of Iran.

In 2001, she obtained a graduate research position at McGill University (“McGill”) in Quebec. Their good fortune continued and the respondent was subsequently able to obtain a graduate research position at the same institution. The parties obtained student visas and moved with their son to Montreal in September of 2001. They spent the next four years pursuing doctoral and post-doctoral studies in the neuroscience field at McGill. The respondent received his Ph.D. in 2005 and the petitioner received her Ph.D. in 2006. [ 29 ] The parties sold the properties they received from their families.

They used the proceeds from the first sale to purchase a building that was later sold to support their move to Canada, and the proceeds from the second sale, a few years later, to provide a down payment for the parties’ jointly owned home in Montreal. [ 30 ] In mid-2008, the petitioner completed a post-doctoral fellowship in cognitive neuroscience and the respondent completed a post- doctoral fellowship in neuroscience with the Department of Ophthalmology, both at McGill. [ 31 ] The parties’ incomes were comparable during the years they pursued their studies at McGill, approximately $17,000-$20,000 per year during their Ph.D. programs, and approximately $40,000 per year for the three years of their post-doctoral fellowship programs. [ 32 ] During his time at McGill, the respondent was a co-inventor on two projects that resulted in two patented inventions.

The first related to the assessment and treatment of a certain vision disorder (“Patent #1”) and the second to an invention to treat the disorder in question (“Patent #2”). [ 33 ] For several years, the parties each unsuccessfully sought medical residencies. The petitioner ultimately succeeded in obtaining a residency in psychiatry in Winnipeg. Sometime thereafter, a residency in neurology became available in the city and the respondent obtained same. [ 34 ] The parties’ residencies at the University of Manitoba began in July of 2008, with each earning approximately $50,000-$65,000 per year.

Early during this period they sold their jointly owned home in Montreal and purchased another jointly owned home in Winnipeg (the “family home”). [ 35 ] After the respondent completed his residency in June of 2012, the family spent a period of time in the Boston, Massachusetts area. The respondent had obtained a one year neuro-ophthalmology clinical fellowship at Harvard University (“Harvard”), during which period he was paid $70,000 Canadian. He received a neuro-ophthalmology subspecialty certificate.

Both his neurology and neuro-ophthalmology training have been recognized by the College of Physicians and Surgeons of Manitoba. [ 36 ] The petitioner was able to arrange to complete the remaining six months of her psychiatry residency outside of Manitoba and obtained an unpaid research fellowship in neuro-psychiatry and behavioural neurology at Harvard.

Her efforts were supported financially by the Department of Psychiatry at the University of Manitoba, and she received remuneration of approximately $105,000 for the year, some $70,000 of which was essentially a forgivable loan pursuant to a return of service agreement requiring her to complete a certain period of service as a psychiatrist in Manitoba.

Although the behavioural neurology and neuro-psychiatry certifications she obtained were viewed as impressive additions to her resume by the Department of Psychiatry, this training has not been recognized by the College of Physicians and Surgeons of Manitoba. [ 37 ] In the middle of 2013, the parties and their child returned to Manitoba and, their residencies both being complete, the parties both began practicing medicine; the petitioner as a psychiatrist and the respondent as a neurologist and neuro-ophthalmologist. [ 38 ] The parties established a joint medical corporation.

In September of 2014, they established a second corporation, Brain Matters

Inc., in which they each held shares, and the petitioner held certain shares in trust for their then-minor son. The respondent transferred his interest in Patent #1 to that corporation in return for certain additional shares. [ 39 ] The parties have excelled in their fields of medical practice, and were clearly proud of their professional and academic achievements and highly regarded by their peers.

They have both continued academic pursuits and conduct research in their fields of interest and practice. [ 40 ] The parties separated on April 17, 2015, slightly less than two years after they returned to Manitoba and commenced their medical practices. [ 41 ] The parties continued to use their joint medical corporation that year, but its equity was equalized and sole ownership was assumed by the petitioner who renamed it as her new medical corporation.

The respondent incorporated his own new medical corporation that received share redemption income in 2016 for his half of the shares of the joint medical corporation. [ 42 ] A dispute that arose with McGill respecting the respondent’s rights and status relating to Patent #2 was resolved subsequent to the parties’ separation. The respondent was successful in the legal action he initiated to establish his status as one of the co-inventors of that Patent. [ 43 ] The petitioner filed a Petition for Divorce in September of 2015, and the respondent an Answer and Petition for Divorce in June of 2017.

Both pleadings were subsequently amended and re-amended. The petitioner also filed a Reply. [ 44 ] The petitioner remained in the family home after the parties’ separation. [ 45 ] By 2016, the respondent had purchased a home on R. Road for $1,650,000. At some point, he commenced cohabiting with N.A. [3] and their daughter was born in October of 2017. N.A. is also a neurologist. [ 46 ] In 2017, the petitioner purchased a condominium for $238,750 through her medical corporation.

Her parents resided in the property as tenants and their rental payments offset a significant portion of its expenses. [ 47 ] By Endorsement issued July 25, 2018 a reference to the Master was ordered for an accounting and valuation of the assets and liabilities of the parties pursuant to The Family Property Act , C.C.S.M. c. F25 .

The reference included valuation of the respondent’s interest in Patent #2, noted to be an agreed Family Property Act asset (albeit with the respondent seeking to reduce its value by the costs he incurred to establish his interest in the Patent). [ 48 ] Through their separate medical corporations, in 2018 the respondent and N.A. purchased a jointly owned home in the Toronto area for $1,430,000 (described as an investment property on his Manitoba medical corporation’s financial statements). [ 49 ] When N.A. pursued and completed a post-graduate fellowship in Ontario in 2019, the respondent went with her and their daughter, regularly returning to Winnipeg to see patients and maintain his Manitoba practice.

He established an Ontario medical corporation and provided some medical services in that province, as well as devoting time to research and volunteer activities. [ 50 ] Prior to and after the parties’ separation, the respondent practiced out of the B. Clinic, until its closure in the summer of 2020. When he was unable to negotiate terms for the extent of office space he felt was necessary to meet the requirements of his practice, in mid-2020 the respondent and N.A. jointly purchased a property on S. A. Road through their Manitoba medical corporations.

They both practiced out of that facility from August of 2020. [ 51 ] On January 6, 2020, the parties executed a comprehensive Separation Agreement that addressed all matters then at issue in their pleadings, save and except their divorce, the petitioner’s spousal support claim and costs. The Agreement also addressed issues relating to the Mehrieh and an Iranian divorce. (The registration of the Mehrieh was discharged in February of 2020 and the parties’ Iranian divorce was granted on November 3, 2020.) Spousal Support Introduction [ 52 ] The petitioner sought spousal support from the respondent.

He strongly opposed her claim. [ 53 ]

Section 15.2 of the Divorce Act , R.S.C., 1985, c. 3 (2nd Supp .), provides the following with respect to spousal support: Spousal Support Orders Spousal support order 15.2

(1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse. Interim order

(2) Where an application is made under subsection (1), the court may, on application by either or both spouses, make an interim orderrequiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as thecourt thinks reasonable for the support of the other spouse, pending the determination of the application under subsection (1). Terms and conditions

(3) The court may make an order under subsection (1) or an interim order under subsection (2) for a definite or indefinite period or untila specified event occurs, and may impose terms, conditions or restrictions in connection with the order as it thinks fit and just. Factors

(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition,means, needs and other circumstances of each spouse, including (

a) the length of time the spouses cohabited; (

b) the functions performed by each spouse during cohabitation; and (

c) any order, agreement or arrangement relating to support of either spouse. Spousal misconduct

(5) In making an order under subsection (1) or an interim order under subsection (2), the court shall not take into consideration anymisconduct of a spouse in relation to the marriage. Objectives of spousal support order

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should (

a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (

b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above anyobligation for the support of any child of the marriage; (

c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (

d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time. [54] The Supreme Court of Canada in Moge v. Moge, (SCC), [1992] 3 S.C.R. 813, directed that all of the fourobjectives of a spousal support order set out in s. 15.2(6) of the Divorce Act, are to be considered in a claim for spousal support.

TheCourt indicated at p. 866: As economic consequences have to be shared in an equitable manner by both partners, it is my view that the Act, while envisagingcompensation for the economic advantages and disadvantages of marriage or marriage breakdown, does not necessarily put the entireburden of such compensation on the shoulders of only one party.

I stress here that in the discussion of spousal support one must not losesight of the fact that the real dilemma in most cases relates to the ability to pay of the debtor spouse and the limits of support orders inachieving fair compensation and alleviating the economic burdens of the disadvantaged spouse.

While the disadvantages of the kind Imention hereunder are compensable, though not necessarily automatically or fully compensated in every case, the ultimate goal is toalleviate the disadvantaged spouse’s economic losses as completely as possible, taking into account all the circumstances of the parties,including the advantages conferred on the other spouse during the marriage. [55] The Supreme Court of Canada in Bracklow v. Bracklow, (SCC), [1999] 1 S.C.R. 420, stated that there werethree bases of entitlement to spousal support: compensatory, non-compensatory and contractual.

The nature of those claims aredescribed in

Chapter 3 of the Spousal Support Advisory Guidelines: The Revised User’s Guide, (Department of Justice: Professor CarolRogerson and Professor Rollie Thompson: April 2016), (“SSAG Revised User’s Guide”), in the following manner: (

a) The principles of entitlement • Compensatory claims are based either on the recipient’s economic loss or disadvantage as a result of the roles adopted during themarriage or on the recipient’s conferral of an economic benefit on the payor without adequate compensation. . . . . . • Non-compensatory claims involve claims based on need. “Need” can mean an inability to meet basic needs, but it has alsogenerally been interpreted to cover a significant decline in standard of living from the marital standard.

Non-compensatory supportreflects the economic interdependency that develops as a result of a shared life, including significant elements of reliance andexpectation, summed up in the phrase “merger over time”.

Common markers of non-compensatory claims include: the length of the relationship, the drop in standard of living for the claimant after separation, and economic hardship experienced by the claimant. . . . . . • If there is a significant income disparity, entitlement on either compensatory or non-compensatory grounds may be established despite the fact that the recipient has a relatively high income and could on some understandings of the term be seen as “self- sufficient”: … • … the contractual basis [claims] which [cover] not only formal domestic contracts but also implied or informal agreements. … [Emphasis in original] [ 56 ] The petitioner did not pursue an interim spousal support application but the respondent was aware she was seeking spousal support at least from the time he was served with the Petition for Divorce she filed in September of 2015. [ 57 ] The parties had markedly different positions with respect to the petitioner’s entitlement to spousal support.

The petitioner alleged that she was entitled to spousal support on contractual, compensatory and non-compensatory bases. She contended that the respondent’s income significantly exceeded hers during the two years preceding their separation, as did his income and income-earning potential thereafter. The respondent took the position that the petitioner was fully independent and had no entitlement to, or need for, spousal support by virtue of her professional qualifications and her significant income and income-earning potential.

He contended the parties had comparable incomes and income-earning potential. [ 58 ] The relative incomes and income-earning capacity of each party are relevant to the petitioner’s claim for spousal support, both with respect to entitlement and, if found, quantum and duration. [ 59 ] This proceeding involved complex and significant issues respecting determination of each party’s income and income-earning potential. The following portions of this decision examines the parties’ past and potential future income situations. Expert Evidence – Physicians’ Remuneration [ 60 ] The petitioner retained Matthew Maruca (“Mr.

Maruca”) to prepare a report on the issue of physicians’ remuneration, particularly hers and that of the respondent and their respective earning capacities. She called him as a proposed expert witness on those issues. Her counsel examined Mr. Maruca on his “qualifications”, and the respondent’s counsel conducted a cross-examination with respect to same. [ 61 ] The respondent had also retained an individual, Barry Milne (“Mr. Milne”), to prepare an opinion on certain income-related areas, but ultimately did not call him as a witness. When Mr.

Maruca’s qualifications were being examined, the respondent’s counsel indicated that he had suggested to counsel for the petitioner that he “would be prepared to consider that, given the sum of [Mr. Maruca’s] opinions are consistent with Mr. Milne’s opinions in certain areas … if we agreed that both were experts that I could consider that”. [ 62 ] While that position was of interest, the Court noted that qualifying an individual as an expert witness was not simply a matter of agreement between counsel and the requisite examination occurred. [ 63 ] Mr.

Maruca received his Manitoba Call to the Bar in 2005 and was legal counsel with Doctors Manitoba from 2010 to 2019. He described Doctors Manitoba as being “the professional association that represents all physicians in Manitoba. It is the bargaining agent for contracts and compensation for nearly all physicians in Manitoba and the mandate is to advocate for the person, professional, and economic well-being of physicians in Manitoba.” [ 64 ] When he initially joined Doctors Manitoba, Mr. Maruca was Associate Director of Dispute Resolution and shortly thereafter became General Counsel.

In that position he had what he described as a very broad portfolio of responsibilities, with “the bulk of [his] time or a significant portion of [time] … spent [on] Doctors Manitoba’s core business, which is negotiations of physicians’ compensation”. [ 65 ] Mr. Maruca was a senior member of the team that negotiated the Master Agreement between Manitoba Health and Doctors Manitoba, and all of the agreements under it, including the physicians’ manual.

He testified that as many as five staff within Doctors Manitoba would have the same familiarity as him with respect to the Master Agreement and those subsidiary agreements. He was counsel for the negotiation of the last three Master Agreements reached prior to the time he left Doctors Manitoba.

It was clear that he had impressive familiarity with the various components and elements of physicians’ compensation in Manitoba, including the specific and unique considerations applicable to psychiatrists (such as the petitioner) and physicians (like the respondent) practicing in other areas of specialization. [ 66 ] The petitioner’s counsel argued that the report prepared by Mr.

Maruca, and entered as evidence, would provide valuable evidence to counsel and the Court in interpreting and assessing the incomes and income earning capacity of both of the parties. [ 67 ] The respondent’s counsel raised an issue with respect to Mr. Maruca’s impartiality given that, subsequent to his time with Doctors Manitoba, he had assisted certain psychiatrists in negotiating their contracts, including remuneration, with the McDermot Group of Psychiatrists, Inc. (the “McDermot Group” or “MGP”). Mr.

Maruca did not provide such assistance to the petitioner, who, as discussed subsequently, had a contract with the Group from the time she commenced her practice as a psychiatrist. Arguably the success of Mr. Maruca’s efforts in negotiations to increase his clients’ portions of the pool of funds available for psychiatrists through the

McDermot Group would have, if anything, reduced the funds available to the petitioner and been contrary to her individual financial bestinterests. [68] The tests for qualification of expert witnesses were succinctly described by the Chief Justice of this Court in Campbell et al.v. Jones et al., 2016 MBQB 10 , in the following manner: [146] In [White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23 , [2015] 2 S.C.R. 182], Cromwell J.provided a concise yet comprehensive review of the first principles that underlie the governing jurisprudence attaching to expertwitnesses.

The court confirmed what it characterized as the “broad outlines of the expert witness’ duty to the court”. (See Burgess atpara. 26.) That duty includes the provision of independent assistance to the court by way of objective unbiased opinion which shoulditself be seen as an independent product of the expert, who is “uninfluenced as to form or content by the exigencies of the litigation …”. (See National Justice Compania Navieru S.A. v.

Prudential Assurance Co., [1993] 2 Lloyd’s Rep. 68 (Q.B.) as cited in Burgess atpara. 27.) As stated in National Justice Compania at p. 81, “an expert … in the High Court should never assume the role of anadvocate.” [147] The Supreme Court of Canada in Burgess adopted, with minor adjustments, the two-stage test for determining the admissibility ofexpert evidence as set out in R. v. Abbey, 2009 ONCA 624, 97 O.R. (3d) 330. The first stage of the test will involve a party attemptingto establish that the proposed expert meets the threshold requirement of admissibility as set out in R. v.

Mohan, (SCC), [1994] 2 S.C.R. 9. Those four Mohan requirements are: • logical relevance; • necessity; • absence of an exclusionary rule; and • a properly qualified expert. If the expert evidence does not meet the threshold at this first stage, the evidence is excluded. At the second stage, the court, pursuant toits gatekeeper function, is required to conduct a cost benefit analysis. That analysis involves a discretionary balancing of the potentialrisks and benefits surrounding the admission of the proposed evidence. (For a related discussion see R.v.

M.C., 2014 ONCA 611 atparas. 78-79, 314 C.C.C. (3d) 336; and Dmytriw v. Odim, 2015 MBQB 24 at paras. 46-48, 314 Man. R. (2d) 261.) [148] In the context of the two-stage test for the admissibility of expert evidence, the court in Burgess was required to address two mainquestions:

(1) Should the elements of an expert’s duty to the court go to the admissibility of the evidence rather than simply to weight?

(2) If so, is there a threshold admissibility requirement in relation to independence and impartiality? Cromwell J. answered both questions in the affirmative. He noted at para. 34 of Burgess: … a proposed expert's independence and impartiality go to admissibility and not simply to weight and there is a threshold admissibilityrequirement in relation to this duty.

Once that threshold is met, remaining concerns about the expert's compliance with his or her dutyshould be considered as part of the overall cost-benefit analysis which the judge conducts to carry out his or her gatekeeping role. [149] Insofar as there is a threshold admissibility requirement in respect of an expert’s needed impartiality andindependence, Burgess suggests that any purported bias should be properly considered as part of the “qualified expert” factor ofthe Mohan framework. … [69] I had no hesitation in qualifying Mr.

Maruca as an expert with respect to the issue of physician compensation in Manitoba. Inreaching that conclusion I took into account Mr. Maruca’s extensive experience in the area of physicians’ remuneration, finding that,despite the fact he had not previously been qualified as an expert in any legal proceeding or given evidence in such a proceeding, hisexperience and professional qualifications were such that the relevant legal tests had been satisfied. [70] Mr. Maruca prepared two reports, the first dated January 8, 2020 and the second updated report dated April 3, 2021.

He testifiedduring the initial portion of the trial and gave further testimony when the trial resumed some 15 months later. Both reports were markedas exhibits and included portions commenting on Mr. Milne’s report. As the respondent did not call Mr. Milne to testify or rely upon hisreport, I have disregarded those portions of Mr. Maruca’s reports. [71] In his written argument, at p. 39, the respondent argued that while Mr.

Maruca’s “evidence on general matters was helpful” andhe had “done an adequate job of compiling “raw data”, “unfortunately, when it came to an analysis of the data and his opinions about thespecific earning potential of the [parties] his evidence was unreliable as it was based on incorrect assumptions, ignored information andeven mathematical errors (sic).

Furthermore his report [was] tainted by clear “confirmation bias”.” He took the position that Mr.Maruca’s report and conclusions were unreliable and should be disregarded. [72] I have carefully reviewed all of the arguments advanced by the respondent with respect to Mr. Maruca’s report and hisconclusions, and am unable to accept same. The respondent’s arguments respecting confirmation bias are without merit. The fact thatMr.

Maruca’s ultimate conclusions might be close in amount to figures that were put forward by the petitioner’s counsel, figures thatwere based upon publicly-available information and the parties’ own financial records, does not establish “confirmation bias”. [73] Mr. Maruca had the benefit of updated and far more expansive financial disclosure from both parties for his second report, as

noted therein. He had been provided with the report of the individual retained by the respondent with respect to the issue of physician’s remuneration, and the letter from the respondent’s counsel to that individual. He also met with the petitioner and her accountant, and with the respondent and his counsel. He asked to meet with the respondent’s accountant but such a meeting did not occur. Mr. Maruca asked the respondent to provide a number of documents. While a number of the requested documents were provided, others were not or were provided only shortly before Mr. Maruca resumed testifying. [ 74 ] Mr.

Maruca’s report was exceedingly comprehensive, well-written and informative, and considered extensive documentation, information and reports with respect to the circumstances of both parties and their practices. [ 75 ] The respondent did not adduce any evidence to contradict the conclusions reached by Mr. Maruca, or to testify about physicians’ compensation generally, or the incomes or income potentials of the parties. [ 76 ] In reviewing Mr.

Maruca’s conclusions with respect to the income and income-earning potential of the petitioner, it is clear that in many instances where there was a range of potential incomes, he actually chose the higher end of the range, the amount that was actually financially detrimental to the petitioner as it increased her income. [ 77 ] Mr. Maruca was rightly concerned about the respondent’s estimates of his overhead expenses in his new clinic originally being estimated at percentage of billings and then subsequently “corrected” to almost twice as much a percentage.

He was rightly concerned that the respondent failed to provide current information or, even after requested, make his accountant available for a meeting to discuss certain claims and expenses, unlike the petitioner who did provide access to her accountant. [ 78 ] The respondent’s counsel also made much of portions of an Excel spreadsheet that was included in the materials provided by Mr. Maruca, in error. In response to repeated questioning by the respondent’s counsel, Mr.

Maruca repeatedly explained that the data on the spreadsheet just constituted “dummy” numbers he inserted to test whether the program could automatically do certain calculations. He explained he ultimately did not use that calculation function, but inadvertently had not deleted the “dummy” data, when he forwarded materials to counsel. He emphasized that any inferences that counsel might wish to draw from the “dummy” data would simply be incidental and should not be relied upon. [ 79 ] When the respondent’s counsel continued questioning Mr.

Maruca with respect to the numbers on the Excel spreadsheet, and I confirmed that Mr. Maruca had said those were not the actual numbers, the respondent’s counsel responded that he accepted that. [ 80 ] The respondent argued that a number of other conclusions reached or steps taken by Mr. Maruca further established confirmation bias, but most of those concerns were really with respect to the actual conclusions that Mr. Maruca reached, conclusions that I have determined were consistent with, and supported by, the evidence presented. [ 81 ] Mr.

Maruca’s conclusions were reached based on the information that was provided to him by both parties. His concerns with respect to the overhead estimates provided by the respondent for his new clinic, were well-founded. Initially he was provided with an estimate of 20 to 25 per cent of billings, later corrected to 40 or 45 per cent of billings. He asked the respondent and his counsel to come up with precise numbers because “you don’t pay your bills as a percentage of billings.

You pay them as hard numbers.” He noted that he was “looking for the summation of those precise numbers, and that was never provided to me in a satisfactory way.” He requested information from the respondent’s bookkeeper or accountant with respect to the matters included in his corporation’s financial statement, and that was not provided. The respondent submitted lists of the annual expenses for his new clinic. [ 82 ] Contrary to the respondent’s counsel’s suggestions, Mr. Maruca did take into account time for holidays and other time off when calculating the respondent’s potential income.

He also considered the impact of the respondent not continuing on-call work in Manitoba or a medical practice in the Province of Ontario, noting that if those events occurred, he would “expect to see a corresponding increase in another number”. [ 83 ] The respondent did not provide specific evidence with respect to the time he expended on management duties relating to his new clinic, or the role played by his partner, N.A. The respondent was clear that he would be working 40 to 45 hours per week in his clinic, in addition to 10 to 15 hours per week on research.

He indicated he would work full days and conduct research in the evening or on the weekend. March 24, 2021 correspondence from his counsel to Mr. Maruca indicated that any time the respondent spent on management duties was in addition to his weekly clinic hours. In particular, the correspondence stated “[h]is clinic provides him with sufficient work to work between 40 and 45 hours a week and his research and administrative duties are over and above that.” [ 84 ] In conclusion, Mr. Maruca’s opinions were based soundly on the documents, evidence and information provided to him by the parties or publicly available.

To the extent that there may have been gaps or inconsistencies with respect to certain issues respecting the respondent’s practice, much of the responsibility for that rested with the respondent, who did not, when given the opportunity, provide information and documents that could have clarified issues. This was consistent with his evidence in response to my questions about the manner in which he received revenues at his new clinic and paid for its expenses.

It was clear from his responses, that the respondent could have quite easily produced a document that set out all of the revenues received by his new clinic with respect to his practice, as well as the expenditures incurred. The respondent testified that his revenues were deposited in his corporate bank account, and that he paid expenses by cheques from that account (an account for which he kept concurrent records) and/or through a corporate charge card. His failure to provide that current information gives rise to negative inferences. [ 85 ] When I refer to Mr.

Maruca’s report or updated report hereafter, unless otherwise indicated, I am referring to his April 3, 2021 report. [ 86 ] As noted previously, the petitioner is a psychiatrist and the respondent is a neurologist and neuro-ophthalmologist. [ 87 ] In his updated report commencing at p. 7, Mr. Maruca described the manner in which physicians are paid as follows:

Section 3: How physicians are paid

Physician compensation is complex and varies by medical practice. The form and substance of each physician’s compensation is determined by a variety of factors including, but not limited to, specialty, method of payment, full-time equivalent status, and practice setting. Specialty Physicians go through intensive training in their chosen specialty. Medical students select a specialty before starting residency. Getting into a chosen specialty and location of training is a competitive process. As mentioned above, [the respondent] has accredited training in neurology and neuro-ophthalmology.

Both are recognized by the College of Physicians and Surgeons of Manitoba. [The petitioner] has accredited training in psychiatry and a neuro-psychiatry and behavioural neurology, respectively. Only the psychiatry training, however, is formally recognized by the College of Physicians and Surgeons of Manitoba. Method of Payment Physicians receive payment for their professional services in three ways. The first is known as fee-for-service . Pursuant to The Health Services Insurance Act of Manitoba, the government insures certain services provided by physicians.

When a physician provides one or more of those services, they can submit a claim to the Department of Health and Seniors Care (“Manitoba Health”) for payment from the Health Services Insurance Fund. In this way, they receive a fee for each service. The more services a physician provides, the more that physician can bill. The greater the fees are for those services, the greater the physician can bill. Each fee is negotiated between Manitoba Health and Doctors Manitoba. The second manner of payment is alternate funding .

This is a broad term used to describe payment from Manitoba Health or other government health service delivery organizations, such as Regional Health Authorities, to physicians for insured services that are paid in a manner other than fee-for-service. For example, a Regional Health Authority (“RHA”) may contract with a physician to provide certain services and pay an hourly rate or a stipend. For example, a physician that provides on-call services to a hospital or service is typically paid an on-call stipend for that availability.

Most alternate funding agreement/rates are negotiated between Manitoba Health and Doctors Manitoba pursuant to a Master Agreement. The third manner of payment is uninsured services . Patients or third parties pay physicians directly for medical services that Manitoba Health has decided not to insure under The Health Services Insurance Act . For example, the treatment of migraines by neurologists using Botulinum toxin (also known as “Botox”) injections is uninsured. The patient pays the physician directly.

The rate is determined by the physician, subject only to rules prescribed by the College of Physicians and Surgeons of Manitoba related to reasonableness. Completing sick notes for patients, completing forms or writing narrative reports for WCB, MPI, lawyers, or an insurance company, are other examples of common uninsured services. A similar construct exists in each province. Fee-for-service is the dominant payment modality in Manitoba. Few physicians have a zero fee-for-service income.

Some physicians operate within a hybrid model where they receive a combination of fee-for-service and alternate funding payments. Others, depending mainly on specialty, may also provide and be paid for uninsured services. Full-time equivalent status Like any other profession, physicians work differing amounts of hours depending on a variety of factors. Some work full-time, some work part-time and some fluctuate at different times of the year. Upon reviewing the materials referenced above, both [the respondent] and [the petitioner] are currently working full-time hours in their respective fields.

Practice Setting There are a variety of settings in which physicians can practice. Some physicians, including clinician-researchers, are typically entirely hospital-based. Others maintain a clinical setting outside the hospital, such as a private clinic or office, which they either own or lease. Physicians with an academic appointment from a University are also primarily hospital-based while physicians without an academic appointment are primarily community-based in a private setting.

The setting has an impact on overhead, access to patients, access to equipment, access to other support resources, control over the medical practice including scheduling, control over deployment and use of resources, hours of operation, etc. [Emphasis added] [ 88 ] Mr. Maruca’s reports and testimony provided invaluable clarity to the complex area of physicians’ remuneration, with particular emphasis on the considerations relating to the specialties and individual practices of each of the parties.

Parties’ Incomes [ 89 ] In reviewing the parties’ incomes, I have addressed the unusual circumstances that existed in 2015, and that relate to income the parties received, and may yet receive, arising from their interests in Brain Matters Inc., before considering their incomes in and after

2016, and future income potential. a) 2015 [ 90 ] The year the parties separated was unusual with respect to the manner in which they received and declared income. [ 91 ] As noted, the parties established a joint medical corporation after they commenced their respective medical practices. The corporation’s financial statements for the year ending December 31, 2014 were filed as an exhibit.

As those financial statements made no reference to prior years, I am left to conclude that 2014 was the first year that the joint medical corporation operated. [ 92 ] The 2014 Statement of Earnings and Retained Earnings for the joint medical corporation showed revenues of $1,250,040 and tithes of $104,317, for gross profit of $1,145,723. Expenses included $628,850 for salaries, wages and benefits. [ 93 ] Most of the joint medical corporation’s revenues resulted from the respondent’s Manitoba Health Services Insurance Plan (“MHS”) billings, billings that were some five times greater than those of the petitioner.

The petitioner’s MHS billings were $196,556 and the respondent’s MHS billings were $979,775 for the MHS fiscal year ending March 31, 2015, and $201,613 and $1,135,462, respectively, for the MHS fiscal year ending March 31, 2016. [ 94 ] The petitioner and the respondent declared employment income of $270,295 [4] and $400,000, respectively, on their 2014 personal income tax returns.

As those amounts exceed the joint medical corporation’s expenses for salaries, wages and benefits, and the petitioner’s declared income exceeded her MHS billings in either of 2014 and 2015, it appears a portion of the petitioner’s income may have come in the form of salary from another source (such as the University of Manitoba) as occurred in subsequent tax years. [ 95 ] The parties separated on April 17, 2015.

Their Separation Agreement addressed a wide range of issues and contained a number of provisions relevant to their joint medical corporation, and their incomes and financial arrangements that year. [ 96 ] The Separation Agreement noted that “… until September 1, 2015, the parties continued to merge their finances …” (para. 5.b.) and they “… reconciled their joint bank accounts up to and including [that date] …” (para. 8.a.). [ 97 ] The parties “continued to use the joint medical corporation” until the end of December 2015, but subsequently took “all steps necessary to reconcile the bank accounts and tax aspects required to complete a separation of [the] corporation” (save and except for certain outstanding Scientific Research and Experimental Development (“SR&ED”) tax credit claims that were ultimately addressed in the Separation Agreement).

The petitioner “assumed ownership and control of [the joint medical] corporation … as of January 1, 2016”, that corporation was renamed, its equity was equalized and the respondent established his own separate, new medical corporation. (Para. 9, and para. F. of the

preamble, of the Separation Agreement [5] .) [ 98 ] The 2014 financial statements for the joint medical corporation, and the 2015 financial statements for the petitioner’s medical corporation, were filed as exhibits.

As the joint medical corporation became the petitioner’s medical corporation, the 2015 financial statements for the petitioner’s medical corporation showed the comparative 2014 revenues and retained earnings of $1,145,723 and $430,469, respectively, for the joint medical corporation, and the 2015 revenues and retained earnings of $1,264,068 and $798,299, respectively, for the renamed corporation, the petitioner’s medical corporation. [ 99 ] The respondent’s medical corporation received share redemption income of $496,973 in 2016 for his half of the 200 shares in the joint medical corporation. [ 100 ] In their Separation Agreement the parties estimated the amount of the joint medical corporation’s outstanding SR&ED tax credit claims to the end of 2015.

They agreed that the petitioner’s medical corporation would receive the amount of any such allowed benefits. They further agreed on a formula to determine the portion respecting each party’s claim and a mechanism for the petitioner’s medical corporation to pay the respondent’s medical corporation the amount of his claim, with adjustments for tax consequences.

The 2016 and 2017 financial statements for the petitioner’s medical corporation showed amounts for the outstanding SR&ED tax credit ($137,582) and the portion payable to the respondent’s medical corporation ($104,325), that were comparable to the amounts the parties estimated in their Separation Agreement were due to them and, if received, each would receive. The 2016 and 2017 financial statements for the respondent’s medical corporation showed comparable amounts relating to the portion of the outstanding SR&ED tax credits he would receive ($105,325).

There was no evidence that either party actually ever received any of that outstanding SR&ED tax credit. [ 101 ] The foregoing evidence has led me to conclude that until the end of 2015 the parties shared their incomes to a significant degree and having equalized their equity in their joint medical corporation, any spousal support claim should effectively relate to 2016 on.

b) Revenues from Brain Matters Inc. [ 102 ] Paragraph 10 of the parties’ Separation Agreement contained a number of provisions respecting the parties’ rights and obligations with respect to Brain Matters Inc., including provisions respecting distribution of net corporate revenues. [ 103 ] The parties agreed that the respondent would have a first charge upon up to $45,500 of any net revenue paid to Brain Matters Inc. respecting Patent #2, to compensate him for the legal expenses he incurred after December 31, 2015 to establish his status and rights as a co-inventor of that Patent (para. 10.a.IV.). [ 104 ] The parties were each responsible for an initial financial contribution to “cover ongoing expenses including, but not limited to, the costs of the corporate re-organization and transition to new corporate counsel”, with the respondent responsible for certain legal fees to

former counsel. They agreed to share other costs of the corporation’s operation equally (para. 10.a.V.). [ 105 ] I was repeatedly advised that the parties and their son would each share equally in the corporation’s net revenues, being revenues respecting Patent #1 and Patent #2. [ 106 ] On July 24, 2020 the respondent received funds from McGill arising out of a “licensing agreement” between McGill and a third party entity (“corporation A”) that involved Patent #1 and Patent #2.

This licensing agreement is discussed in more detail later in the portion of these reasons addressing the respondent’s alleged breaches of the parties’ Separation Agreement and breach of trust. [ 107 ] The respondent wanted $44,700 in compensation for the time he spent negotiating the net revenue share he (and therefore, Brain Matters Inc.) would receive pursuant to the licensing agreement.

When the petitioner did not agree to that request, as provided in paragraph 10.a.X. of their Separation Agreement, the parties participated in an arbitration process to address, inter alia , the respondent’s claim for compensation. [ 108 ] The February 15, 2021 Amended Award issued by the arbitrator denied the respondent’s $44,700 compensation claim be made from the initial funds received from McGill in 2020, but ordered it “remain a charge upon any additional revenue received by Brain Matters Inc. in the future”.

Until the respondent’s claim was fully paid, the corporation was not to “distribute any portion of future revenues related to [the] patents to its shareholders” (para. 22). [ 109 ] With two exceptions, therefore, the evidence established that the parties would each benefit equally from the net amount of any future revenues received by Brain Matters Inc. The first exception was the $45,500 payment to the respondent for reimbursement of legal expenses, pursuant to terms of the Separation Agreement.

He received and initially retained those funds in late July 2020, returned same to Brain Matters Inc. after the February 2021 Amended Award and again received those funds that spring.

The second exception was the further $44,700 the respondent was to receive as compensation for his time negotiating the royalty share payable respecting Patent #1 and Patent #2, from the next revenues Brain Matters Inc. received from McGill, pursuant to the Amended Award. [ 110 ] In the future, save and except for the $44,700 in additional compensation that the respondent was to receive from the next revenues from McGill, the parties and their son will each receive an equal share of the net corporate revenues of Brain Matters Inc.; if the petitioner receives $100,000, the respondent and their son will each receive the same amount.

As a result, I have not speculated with respect to the amount of net future corporate revenues the parties might each receive through their interest in Brain Matters Inc. or, with the exception of the $45,500 payment to the respondent for reimbursement of legal expenses, pursuant to terms of the Separation Agreement, and the $44,700 in additional compensation to be paid to him at some future time, taken same into account with respect to their incomes.

Petitioner’s Income and Income Potential [ 111 ] The petitioner is a psychiatrist and has had a contract with the McDermot Group since she began her psychiatry practice in mid- 2013. She is part of a group of psychiatrists known as the McEwen Group through which she practices at the St. Boniface General Hospital. [ 112 ] Mr. Maruca’s report provided valuable information with respect to the nature of psychiatrists’ contracts with the McDermot Group.

He described the Group as being composed of “the Winnipeg Regional Health Authority [“WRHA”], Shared Health and the University of Manitoba, Department of Psychiatry”, noting that “[t]ogether they operate the psychiatry and the mental health program system in Manitoba and effectively control its resources”. [ 113 ] Mr. Maruca stated that “virtually all psychiatrists in Winnipeg contract with the McDermot Group.

The only exception is those psychiatrists that run a private practice and have no involvement with the WRHA or Shared Health hospital sites for services and have no academic or research role with the University at all. There are very few such psychiatrists.” [ 114 ] The petitioner’s contracts with the McDermot Group govern the amount of remuneration she receives for a specified number of hours per year at a prescribed hourly rate of pay, and the amount she will receive for fee-for-service billings above her billing expectation amount.

Her weekly hours of work have been allocated to various functions/tasks, including direct patient care, research, committees/meetings and consultations. The hours referred to in the contracts have varied somewhat, as has her base remuneration, the time allocation descriptions and her base hourly rate. The contracts confirm she was expected to participate in the on-call rota and to attend a certain percentage of committee and other meetings. Failure to do so could reduce her remuneration.

The petitioner also devoted several hours each week to teaching, an activity that she testified was not reflected in specified hours in her contract. [ 115 ] Her April 26, 2018 contract for the period from September 1, 2017 to November 30, 2019, referred to a base rate of $135/hour for 40 weekly hours for 44 weeks, for total remuneration of $238,150 (including a seniority stipend of $550). [ 116 ] Her March 11, 2020 contract for the period from December 1, 2019 to November 30, 2021, referred to a base rate of $150/hour for 38.5 hours weekly hours for 44 weeks, for a base rate of $254,100, in addition to a seniority stipend of $550 and $23,970 respecting a contract with Veterans Affairs Canada, for total remuneration of $278,620. [ 117 ] The petitioner’s annual billing expectation pursuant to her most recent contracts was $90,200, being her “direct care hours” of 10.25 per week for 44 weeks at $200/hour.

The remainder of her weekly hours were allocated to other expected activities, including meetings/committees, some consult liaison time and 17 hours of research. Her contracts provided that she would receive 30 per cent of her billings above her annual billing expectation amount, with the MGP retaining the remaining 70 per cent. Earlier contracts allowed her to work an unlimited number of “private practice” hours, and retain the earnings generated by same, but her most recent March 11, 2020 contract limited her to an average of eight private practice hours weekly.

She also has income from uninsured services included in her private practice hours. [ 118 ] The petitioner has a “GFT” (Geographic Full Time) appointment at the University of Manitoba reflective of her research and

teaching obligations. She was an Assistant Professor with the Department of Psychiatry from 2013 to 2018 and, commencing in 2018, an Associate Professor with that Department, as well as an Adjunct Professor with the Department of Physiology and Pathophysiology. [ 119 ] The petitioner’s total income or revenue is reflected in her personal income tax return and that of her medical corporation. The University of Manitoba is one of the funding sources for her MGP contract, and the income relating to her work with the University (her “UMG” salary) has been set out in a T4 slip.

For example, her March 11, 2020 contract with the MGP describes $75,590 of her total “base” MGP remuneration as attributable to the University of Manitoba (essentially the same amount of T4 income shown on her 2020 personal income tax return). Her personal income tax return also included “other” UMG payments reflected in T4A slips and varying amounts for gross and net business income, dividends and other income. She contributes to a pension plan with UMG. [ 120 ] The petitioner’s other sources of “income” or “revenue” are shown on the financial statements for her medical corporation.

That corporation has a December 31 year end. [ 121 ] In summarizing the petitioner’s income history and providing an opinion with respect to her earning capacity, Mr. Maruca considered, inter alia , the personal income and the revenue and expenses of her medical corporation (excluding some expenses because of their nature, as he did in his conclusions respecting the respondent’s overhead expenses), her area of specialization, her contract with MGP and her MHS billings. [ 122 ] The petitioner claimed $125,009 in employment income on her 2016 personal Tax Return

Summary. The Statement of Earnings and Retained Earnings for her medical corporation referred to 2016 revenues of $298,467 and payment of salaries, wages and benefits of $129,642.

Presumably that sum included some portion of her declared personal income given her private MHS fee-for-service billings, MGP annual remuneration, 30% of MGP MHS fee-for-service billings above her billing expectation amount, and uninsured billings were $327,590 and $362,380 for the fiscal years ending March 31, 2016 and 2017, respectively. [ 123 ] The respondent filed a document summarizing the petitioner’s incomes for 2016 to 2018, based on her Line 150 personal income and her medical corporation’s income before tax. There were significant issues with respect to the calculations for 2016.

The respondent calculated the petitioner’s total 2016 income was $380,005, consisting of Line 150 income of $125,402 and corporate income before tax of $254,603. The 2016 Statement of Earnings and Retained Earnings for the petitioner’s medical corporation actually showed before tax income of $243,603. That amount also included $137,582 for the outstanding SR&ED tax credit recovery as “other income”.

As previously noted, the parties addressed that credit in their Separation Agreement and while the petitioner’s medical corporation would receive same (if it was paid), most of it would be paid to the respondent’s medical corporation.

Removing that possible SR&ED tax credit recovery payment from the 2016 before tax income of the petitioner’s medical corporation, meant the corporation actually had before tax income of $106,021, resulting in the petitioner having total 2016 income (using the respondent’s approach) of $231,423 rather than $380,005. [ 124 ] In 2017, the petitioner claimed $150,678 of employment income, as well as dividend, interest and business income, for total Line 150 income of $154,811 on her personal Income Tax and Benefit Return.

The Statement of Earnings and Retained Earnings for her medical corporation referred to revenue of $368,875 in professional fees and earnings before taxes of $253,598. [ 125 ] The petitioner’s total 2017 Line 150 personal income and corporate earnings before taxes came to $408,409. [ 126 ] In 2018, the petitioner claimed $73,504 in employment income, as well as dividend and business income, for total Line 150 income of $75,715 on her personal Income Tax and Benefit Return.

The 2018 Statement of Earnings and Retained Earnings for her medical corporation referred to revenue of $357,684 from professional fees and earnings before taxes of $212,762. [ 127 ] The petitioner’s total 2018 Line 150 personal income and corporate earnings before taxes came to $288,477. [ 128 ] In 2019, the petitioner claimed $75,342 in T4 income and $16,620 in net business income on her personal income tax return, for total Line 150 income of $91,962.

The 2019 Statement of Earnings and Retained Earnings for her medical corporation referred to revenue of $336,782 from professional fees and earnings before taxes of $61,586. [ 129 ] The petitioner’s total 2019 Line 150 personal income and corporate earnings before taxes was $153,548. [ 130 ] In 2020, the petitioner claimed $77,590 in T4 income, $1,100 in net T4A income and $20,700 in dividend income on her personal income tax return, for total Line 150 income of $99,390. [ 131 ] The petitioner’s 2020 UMG Statement of Earnings also showed “gross clinical income” (“reportable business income”) of $260,312, for total professional income of $339,413 (including her UMG salary and other UMG income reflected on her personal income tax return).

The 2020 statement of earnings and retained earnings for her medical corporation referred to revenue of $260,312 from professional fees and $16,920 from “clinic revenue”, for total corporate revenue of $277,232 and earnings before taxes of $108,071. [ 132 ] The petitioner’s total 2020 Line 150 personal and corporate earnings before taxes came to $207,461. [ 133 ] In his argument, the respondent contended that the petitioner could receive considerable additional income from another source. [ 134 ] In 2018 the petitioner commenced efforts to establish what she described as a memory and “neuropsych” clinic or an “efficient multi-disciplinary memory clinic”, that she hoped would provide a valuable service and be financially remunerative.

She wanted to work two days a week in the new clinic, known as “Brain Waves”, maintain academic credentials through a nil appointment, continue doing research and work three days a week with the Department of Psychiatry. The petitioner’s negotiations to achieve this goal began in 2018 and took place over a lengthy period of time, but the end result was that the Department did not support her plan to divide her work

schedule as proposed. She was faced with a stark choice: to resign and lose her academic and WRHA privileges or remain in her existing fulltime GFT position. She chose the latter option and the clinic did not open in the manner the petitioner envisioned. [ 135 ] During this period the petitioner entered into a multi-year lease of clinic space near the St. Boniface Hospital and began paying

rent in late 2018. Through her medical corporation she also purchased a transcranial magnetic stimulation (“TMS”) machine for use in the new clinic [6] , a machine that can be used to treat depression. [ 136 ] At the time she made these arrangements, the petitioner benefitted from a service contract with Veterans Affairs Canada pursuant to which some patients received TMS treatments at St. Boniface Hospital. She also had no cap on her private service hours in her contract with the McDermot Group.

The situation fundamentally changed in October of 2019, when the Group benefitted directly from the new contract with Veterans Affairs Canada to provide TMS services at St. Boniface Hospital. Payments for services pursuant to that contract were thereafter received by MGP, with that source of revenue forming a maximum of $23,970 of the petitioner’s anticipated earnings through the Group. As noted by Mr.

Maruca, this change, together with the cap on her private practice hours, meant a significant reduction in the petitioner’s potential income from uninsured services. [ 137 ] The evidence established that TMS is an uninsured service. The petitioner stated that there are a limited number of people prepared to pay for TMS treatment, and if she provided the TMS service, it would count against her limited private practice hours. [ 138 ] The petitioner testified that she hoped to not lose money on her clinic and even possibly make some money in the long term. Her clinic rent was $39,376 in 2019.

No TMS treatments were provided that year and no clinic revenue was received that year. [ 139 ] The petitioner’s clinic rent was $5,584 less in 2020 ($33,792) because she received a COVID-related subsidy for four months. Her clinic space was able to open in June of 2020 and she received $16,920 in revenue that year from other professionals who used her TMS machine for a fee per treatment. Extrapolating that revenue for a full year would essentially offset her rental costs.

In 2020, her rental payments exceeded her revenue by $16,872. [ 140 ] The petitioner indicated that her attempts to sublease the clinic premises were impacted by the COVID pandemic but she still hoped to be able to do so. [ 141 ] In his argument, the respondent contended that the petitioner could receive income in excess of $375,000 per annum from her TMS clinic. He arrived at that figure using the $300 rate paid for TMS treatments pursuant to the former contract with Veterans Affairs Canada, assuming five TMS treatments per day for 50 weeks each year.

His contentions were based on a number of questionable assumptions that are inconsistent with the evidence presented. [ 142 ] Even if there are wait times of four to six months to access the TMS machines at St. Boniface Hospital (where the service is free to the patient), it does not follow that those patients would be willing or able to pay for treatments on an out-of-pocket (or private insurer) basis and create the demand the respondent suggests.

The petitioner also testified that any time she spent providing TMS treatments at her clinic would be included in her maximum of eight private practice hours each week. Even if there were enough interested patients and the petitioner devoted the entirety of her private practice time to TMS treatments (and she testified that 90 per cent of her practice did not involve TMS) that would result in five $300 treatments each week, not the 25 treatments the respondent estimated.

It would replace time she could spend providing other, potentially more remunerative services. [ 143 ] It is far more reasonable to assume that the petitioner will continue to receive a portion of the TMS treatment fees assessed by other professionals who use her machine.

As noted, she received $16,920 from that source for half of 2020. [ 144 ] It is also worthy of note that the respondent has a TMS machine at his new clinic so arguably he could generate income in the same amount he suggested be attributed to the petitioner. [ 145 ] The respondent also argued that the petitioner had extremely low overhead costs, paying a modest $8,000 tithe for clinic space and other supports provided by the McDermot Group.

It is important to remember that in addition to the tithe, pursuant to her contract with the Group, MGP has had considerable control over the nature of the petitioner’s practice and the duties she must perform, and has retained 70 per cent of the petitioner’s fee-for-service billings above her $90,200 billing expectation amount. Using the MHS fiscal year billing figures, that meant MGP retained $51,014 in the year ending 2015, $34,238 in the year ending 2016, $37,189 in the year ending 2017, and $35,849 in the year ending 2018.

These amounts added to the $8,000 tithe meant the petitioner was effectively paying a “notional tithe” of between 16.7 and 22.7 per cent respecting her MGP base remuneration and the 30 per cent share of her billings above her billing expectation amount these years, much higher than the 2.5 per cent tithe figure repeatedly referred to by the respondent. [ 146 ] In his report, Mr. Maruca took a logical and straightforward approach to estimating the petitioner’s compensation from 2015 to 2020.

He prepared a chart summarizing her revenues from private fee-for-service billings, MGP annual “base” compensation and uninsured services for those years, as well as her gross MGP fee-for-service billings (before the 70 per cent reduction above her billing expectation amount). The fee-for-service billing amounts were based on figures for the MHS fiscal year ending March 31. [ 147 ] Mr. Maruca met with the petitioner and her accountant to discuss the various expenses claimed by her medical corporation, and reviewed the annual “overhead” expense summaries that prepared by the accountant. Mr.

Maruca indicated that those discussions enabled him to “more accurately assess [the petitioner’s] overhead” and he arrived at adjusted amounts for her overhead expenses after removing a number of claimed expenses.

He concluded that the petitioner’s annual overhead expenses ranged between $49,702 and $82,058 from 2016 to 2020, and used an average figure of $61,320 in his “Earning Capacity Illustration” for the petitioner. [ 148 ] The petitioner’s total private practice and MGP MHS fee-for-service billings were: a) $196,556 for the MHS fiscal year ending March 31, 2015; b) $201,613 for the MHS fiscal year ending March 31, 2016 (the first year of their separation); c) $245,299 for the MHS fiscal year ending March 31, 2017; d) $273,974 for the MHS fiscal year ending March 31, 2018;

e) $208,961 for the MHS fiscal year ending March 31, 2019; and f) $156,188 for the MHS fiscal year ending March 31, 2020. [ 149 ] In determining her income earning capacity, he noted that her “uninsured services billings in 2018 and 2019 appear to be an aberration” due to subsequent changes to certain contractual arrangements with Veterans Affairs Canada that resulted in revenues flowing to MGP rather than to the petitioner. He concluded that the changed contractual arrangements with Veterans Affairs Canada would reduce the petitioner’s annual uninsured services billings to between $7,500 and $10,000.

In his “Earning Capacity Illustration” for the petitioner, Mr. Maruca used the higher amount. [ 150 ] Mr. Maruca also noted that the restrictions of her hours of private practice in her latest contract with MGP would impact her private fee-for-service billings. He felt her private fee-for-service billings of $62,311 for the 2019-2020 MHS fiscal year (rather than for prior years when she had no restrictions her private practice hours) would be “likely more reflective of future capacity”.

He ultimately determined that “a more accurate annual average for her private fee-for-service billings would be up to approximately $75,000.” He used that higher figure in his “Earning Capacity Illustration” for the petitioner. [ 151 ] Mr. Maruca included her base MGP remuneration, $11,656 for 30 per cent of her MGP fee-for-service billings above $90,200 (based on $129,054, the average of those billings from 2015 to 2020), $75,000 for fee-for-service private practice billings and $10,000 for uninsured services.

These earnings came to $374,276 before, and $313,956 after, deducting average overhead expenses of $61,320. Mr. Maruca then estimated the petitioner’s annual earning capacity at between $300,000 and $375,000. [ 152 ] The respondent argued that Mr. Maruca had miscalculated the petitioner’s income, in particular by including the rental expense for her clinic.

His written argument included a table that set out his position respecting her income, using her total billing amounts, less the amounts on the overhead expense chart prepared by the petitioner and her accountant, excluding the clinic rental expense. [ 153 ] While Mr. Maruca included the rental expenses in the petitioner’s overhead expenses, he also clearly, after meeting with the petitioner and her accountant, included certain expenses that were not included in the overhead

summary lists they prepared (for example, amounts for training and education, and some expenses relating to her private practi

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