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MAINTENANCE AND SUPPORT - Child support - Financial disclosure - Ability to pay - Order - Interim

Monday, July 05, 2021 @ 9:38 AM  

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Appeal by the husband from an interim order for child and spousal support, an order to pay $150,000 as an interim distribution of family property and ordering him to make broad financial disclosure. The parties separated in 2018. They had three children who resided primarily with the wife since separation. The husband was, directly or indirectly, the sole, majority or a major shareholder in 15 companies. His interests were held through a complex structure which included holding companies, family trusts, and payments between these entities of rent, management fees and dividends. The parties disputed whether the husband’s corporate interests were divisible family property. He argued his interests in the companies were not divisible family property and were improperly considered in the order for an interim distribution. He also argued the chambers judge improperly took pre-tax corporate income into account in the calculation of his income for support purposes. He argued that the attribution of corporate income to him would put the corporations at risk, encroach on their capital, and interfere with the rights of third-party shareholders. The chambers judge ordered that the husband pay child support of $16,630 per month based on an income of $1,023,749. He ordered interim spousal support of $17,000 per month. The chambers judge observed the wife’s asserted expenses were inflated and unreasonable but did not explain how he arrived at that number. The chambers judge ordered the husband to produce all bank account statements for any private corporation in which he had an interest, and all credit card statements for all credit cards held by any of his private corporation. He argued he should not be obliged to disclose records relating to the companies, other than those required for income determination purposes, as the companies might be excluded from family property by the parties’ Interspousal Agreement.

HELD: Appeal allowed in part. The husband’s income was different than that determined by the chambers judge, which called for reconsideration of the support awards. The chambers judge did not err by deciding to attribute a portion of the pre-tax income of Holdco to the husband. The husband had access to far more cash than the amount reflected by his taxable income, and Holdco was a source of that cash. The husband did not establish that a substantial amount of the pre-tax income of Holdco was not available for child support purposes. The chambers judge erred by adding back $96,580 in corporate expenses to the husband’s income. Given the incomplete, conflicting and suspect evidence, and the lack of analysis, this issue should have been left to be resolved at pre-trial or at trial. The husband’s income for child support purposes was thus $927,169. An order for interim child support of $10,000 per month was made. Spousal support was set at $12,500 per month. The chambers judge erred in considering saving for the future in assessing the wife’s needs. The chambers judge erred by treating the husband’s corporate interests as constituting family property when making the interim distribution order. While an interim distribution order was appropriate, the order was varied to provide the husband could mortgage the family home to provide security for a loan up to $150,000 for making all or part of the distribution payment. The disclosure order was too broad. Production was narrowed to bank account statements and credit card statements only in relation to companies of which the husband was both a majority shareholder, either directly or indirectly, and a director.

Merrifield v. Merrifield, [2021] S.J. No. 241, Saskatchewan Court of Appeal, J.A. Ryan-Froslie, R. Leurer and B. Barrington-Foote JJ.A., May 28, 2021. Digest No. TLD-July52021002