Case law: Property division and spousal support

woman holds childs hand

Halliwell v. Halliwell, 2017 CarswellOnt 6391, 2017 ONCA 349 (Ont. C.A.), varying 2016 CarswellOnt 108, 2016 ONSC 182 (Ont. S.C.J.).

The parties in this case were married for 32 years, during which time they were involved in several successful businesses. After they separated, the husband started new businesses and purchased numerous rental properties.

They were married in 1983, separated in 2009 and divorced in 2016. The wife brought an application for equalization of family property and spousal support. The trial judge found that the businesses were not joint family ventures and that the wife should receive an equalization payment and spousal support in accordance with the Family Law Act in the amounts of:

  1. $3,047,061.47 for the equalization of net family property (less credits for advances already made) in equal annual instalments, over five years, with interest at three percent per annum;
  2. $28,978 per month for spousal support beginning January 1, 2016, based on imputed annual income of $1,000,000 for the appellant; and
  3. arrears of retroactive spousal support in the amount of $1,106,887.85, reduced by 40% for income tax, payable by January 8, 2017.

The husband appealed this decision, as a result of which the equalization payment remained same but retroactive spousal support was reduced to $21,000 per month and ongoing spousal support was reduced to $20,000 per month.

The Court of Appeal found that the trial judge’s decision to start the analysis with a determination of joint family venture was an error. In the case of a married couple, the “application of the FLA equalization provisions is the starting point for addressing inequities arising from marriage breakdown”.

In cases where a party’s income exceeds $350,000, the formulas for setting the amount of spousal support in the Spousal Support Advisory Guidelines (SSAG) are no longer presumptive, and spousal support can increase above this ceiling. Once the payor’s income exceeds the ceiling amount, the formulas are not to be applied automatically, but rather an “individualized, fact-specific analysis” must be undertaken.

For incomes over $350,000, it is up to the court to decide whether to leave the support at the ceiling amount or go higher. The Court of Appeal held that the trial judge was fully justified in making an award for spousal support, both compensatory and non-compensatory, but in setting the amount he should have taken into consideration that the high equalization payment “went some considerable distance towards satisfying both bases for the award”.

However, the SSAG’s formula was applied to the husband’s income of $675,000 instead of $1,000,000, which was halfway between the ceiling and the trial judge’s imputed income and adjusted/lowered spousal support accordingly.

The Court of Appeal appeared to be concerned about the ‘windfall’ to the wife and the burden on the husband if he were to pay her the $3,000,000 equalization within 5 years while also paying a high spousal support payment.

This is a sympathetic view to the husband given that the marriage was 32 years long, there were two children and the wife had an imputed income of only $35,000. The wife, under the Court of Appeal’s variance, received considerably less than 50% of the husband’s income.