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MAINTENANCE AND SUPPORT - Spousal support - Calculation or attribution of income

Tuesday, July 25, 2017 @ 8:30 AM  


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Appeal by the husband from an order requiring him to pay monthly spousal maintenance of $3,600 based on an imputed income of $150,000. The trial judge imputed an annual income of $102,133 to the husband, in addition to his average reported total income of $47,867. She based the additional income on $200,000 cash the husband kept in his office, his assets, his ownership of a trucking company and his benefits from using company assets and having capital gains income. The parties separated after a 20-year common law relationship. Before and during their relationship, the husband’s company consecutively operated many small businesses. In addition, the appellant personally bought real estate, fixed it up and sold it, sometimes living in it as a principal residence. The wife was mostly employed doing clerical and manual work for the husband’s businesses while the parties lived together. The judge found that the $200,000 cash was untaxed income rather than the husband’s after-tax savings. She divided this amount by three and imputed $66,666 per year to the husband. In concluding the $200,000 was undeclared income, the judge relied on the husband’s lifestyle, represented by the $200,000 cash and his accumulated assets.

HELD: Appeal allowed. New hearing ordered. There was no sound evidentiary basis for the judge’s finding that the $200,000 was likely stored at home to avoid tax liability. The husband explained his practice of keeping a portion of the profits from the sale of his personal real property in cash in a box after paying bills and investing some. The appellant had accrued significant assets after working for forty years and he provided explanations of how his real estate ventures helped him do this. The appellant’s ownership of a boat, car, ATV, and motorcycle with a total value of $30,500 did not indicate an extravagant lifestyle. The judge provided no explanation as to why she divided the $200,000 cash by three and imputed $66,666 per year to the appellant, in effect finding he received $66,666 undeclared income each year. The judge’s conclusion that the $200,000 cash was accumulated over just three years was based on her misapprehension of the evidence, as there was nothing in the record to support it. She erred in principle by resting her decision only on the company’s retained earnings and failing to consider the whole of the company’s financial situation when she imputed an additional $16,666 in annual income to the husband.

Johnson v. Barker, [2017] N.S.J. No. 234, Nova Scotia Court of Appeal, D.R. Beveridge, M.J. Hamilton and D.P.S. Farrar JJ.A., June 14, 2017. Digest No. TLD-July242017006