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Spousal Support – Berta v. Berta

Family law — Support — Spousal support — Wife’s capital gains on one-time sale of shares not included in her income for spousal support purposes — Wife’s income calculated on basis of what income her capital resources could reasonably produce if properly invested.

*Berta v. Berta, 2016 ONSC 5723

“The Court of Appeal set aside a spousal support award on the basis that the trial judge’s determination of the wife’s annual income for spousal support purposes was unclear. The spousal support issue was remitted to the trial judge for reconsideration. The court also ordered a reconsideration of the award of full indemnity costs to the husband.

Held, the wife should be awarded spousal support in the amount of $8,000 per month.

The wife’s capital gains on a one-time sale of shares in a family business to the husband should not be included in her income for spousal support purposes. The inclusion of capital gains should be determined on a case-by-case basis. If there is a history of capital gains realization, it is a proper consideration. It should rarely be considered where, as here, there is a one-time capital sale, even when the proceeds are paid periodically over time. The fairest approach was to calculate the wife’s income based on what income her capital resources could reasonably pro- duce if invested properly.
The wife served an offer to settle that was better than the judgment. However, she acted in bad faith, and her conduct could not be condoned. The husband should recover a substantial portion of his costs. Reducing the husband’s full indemnity costs by 30 per cent is appropriate.

Lump sum or periodic

In Davis v. Crawford (2011), 106 O.R. (3d) 221, [2011] O.J. No. 1719, 2011 ONCA 294, the Ontario Court of Appeal commented on some of the considerations a court should look to when determining if a lump sum award is appropriate [at paras. 52-58]:

Both the Family Law Act, R.S.O. 1990, c. F.3 and the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) contain provisions conferring a broad discretion on judges to make an award of periodic or lump sum spousal support, or to make an award comprising both forms of support.

Sections 34(1)(a) and (b) of the Family Law Act provide as follows:
34(1) In an application under section 33, the court may make an interim or final order,
(a) requiring that an amount be paid periodically, whether annually or otherwise and whether for an indefinite or limited period, or until the happening of a specified event; [and]
(b) requiring that a lump sum be paid or held in trust. (Emphasis added)

Section 15.2(1) of the Divorce Act reads as follows:
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. (Emphasis added).

Both Acts include sections addressing the purposes of an order for spousal support and the factors to be taken into account in making such an award…..
Specifically, s. 33(8) the Family Law Act provides that the purposes of spousal support are to
. (a) recognize the spouse’s contribution to the relationship and the economic consequences of the relationship for the spouse;
. (b) share the economic burden of child support equitably;
. (c) make fair provision to assist the spouse to become able to contribute to his or her own support; and
. (d) relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home).

The Court of Appeal went on to state, commencing at paras. 70-74:
“As we have said, we do not endorse the submission that lump sum spousal support awards must be limited to “very unusual circumstances” as a matter of principle. Nonetheless, we agree that most spousal support orders will be in the form of periodic payments. To a large extent, this is for four very practical reasons.

First, in many instances, moneys will simply not be available to fund a lump sum support award either to take the place of, or to supplement, an award of periodic support. Instead, support will be paid from one spouse’s income, the only available source for support payments, and it will be paid to finance the ongoing needs of the other spouse, which will generally be of a periodic rather than lump sum character.

Second, for married couples, the court will have determined already the amount to be paid to equalize the value of the spouses’ net family properties: see s. 5, Family Law Act. In many circumstances, this payment will obviate any requirements a dependent spouse may have for transitional capital.

Third, in many cases, there will be no considerations favouring a lump sum award from the perspective of either spouse.

Fourth, in at least some cases where there are considerations favouring a lump sum award, the general exigencies of life, including the possibility that the parties’ means and needs will change, will outweigh the considerations favouring a lump sum award.”

*source: Ontario reports

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