“That finding then brings me to a consideration of the decision of Ducharme J. (as he then was) in Shepley v. Shepley, 2006 CanLII 1924 (ON SC), [2006] O.J. No. 293, 24 R.F.L. (6th) 422 (S.C.J.).
In Shepley – a case that I consider to be quite similar in various material respects to the case at bar – at the date of separation, the applicant husband earned approximately $50,000 per annum as a bank manager. Shortly before the parties’ separation, the husband inherited approximately $900,000 from his parents, comprised primarily of stocks. On the strength of this inheritance from his parents (which the parties agreed was excluded property under s. 4(2) of the Family Law Act), the husband agreed to pay spousal support of $3,000 per month to the respondent wife. However, following separation, the husband incurred a loss of more than $480,000 in his portfolio by reason of a devaluation of his principal stock. Further, when targeted for replacement at his employing bank by a younger employee, the husband accepted a termination package. As a result, the applicant husband’s income from all sources fell to $1,325 per month, comprised of $100 per month in dividends, generated from capital and the remainder in pension income. The husband then brought a motion to terminate his $3,000 spousal support obligation.
In allowing the husband’s application, Ducharme J. reasoned as follows:
Under the Divorce Act, the court in appropriate circumstances may regard the income from capital assets as available for the purpose of determining whether spousal support is payable. In the same way, the court may deem particular assets to be income-producing. But for good or ill the (Ontario) Family Law Act considers inherited property to be exempt from sharing upon the breakdown of the marriage. It is silent on the issue of whether income from such property after breakdown should be exempt. Accordingly, under the provincial legislation, as the cases to which I have referred make clear, such income, as with all other kinds, is to be considered in any child or spousal support matter: Ibid, at 59.
In the result, Ducharme J. concluded as follows:
Painful as the result must surely be for Mrs. Shepley, I conclude on the facts of this case that Mr. Shepley retired from his employment position for valid reasons, that he made the decision out of concern for his health, not to evade his support obligation, and that as a result of his retirement he no longer has the means or the ability to pay spousal support to Mrs. Shepley from his income and no obligation in law to share in property that Ontario law exempts from sharing at the time of separation. It would be unjust, and, indeed, unconstitutional to share as “support” that which the law has exempted from sharing as property. In other facts and circumstances, where, say, exempt property is intact and generating income — for example, rental property or a family business — the result may well be different.
In all the circumstances, I find that Mr. Shepley had no obligation in law to preserve his exempt property, or to maximize his future income, to ensure an ongoing spousal support obligation: Ibid, at paras. 72-73. [Emphasis supplied.]
In my view, for the same reasons given by Ducharme J. in Shepley, the respondent husband here is not required to share with the applicant wife by way of a lump sum interim spousal support award those same capital assets that Ontario law considers to be exempt or excluded property for the purposes of net family property sharing.
That said, the respondent husband here acknowledges that, for spousal support purposes, as the Supreme Court of Canada held in Leskun v. Leskun, a capital asset is part of a support payor’s “means” and, as our court held in Laurain v. Clarke:
The court may therefore base the amount of support which a payor must pay on the income that an asset, such as money in the bank, a pension, trust, or annuity, is capable of generating.
I interpret the Court’s decision in Leskun to mean that a capital asset that a person receives in the form of periodic payments should not itself be treated as income for the purpose of calculating support, but should be treated as part of his means, so that the income which it is reasonably capable of generating should be included in his income for the purpose of calculating his support obligation. [Emphasis added.] Laurain v. Clarke, 2011 ONSC 7195, 16 R.F.L. (7th) 316 (S.C.J.), at paras. 44-45.