April 12, 2022 – Life Insurance in Family Law: To Secure Support or Stand-Alone Benefit?

“The Ontario Court of Appeal dealt with the interplay between ss. 72(1)(f) and 72(7) of the [Succession Law Reform Act] in Dagg v. Cameron Estate, 2017 ONCA 366 (CanLII).  Brown J.A., writing for a unanimous court, framed the issue to be decided as follows at para. 5:

The novel issue raised by this appeal can be stated in the following way: Where a support payor owns a life insurance policy and has been required by court order to name the spousal or child support recipient as the irrevocable beneficiary of the policy, upon the payor’s death what rights does the support recipient have to the policy’s proceeds in the face of a competing claim by another dependant of the deceased brought under Part V of the SLRA?

At paras. 75 and 76, Brown J.A. effectively found that where a payor is subject to a court order that requires her/him to name a support recipient as an irrevocable beneficiary, that portion of the insurance proceeds needed to satisfy support payments is not subject to the “clawback” sections of the SLRA:

I conclude that where, at the time of his death, a spousal or child support payor owns a policy of insurance that is subject to a court order requiring the designation of the support recipient as the irrevocable beneficiary of the policy, s. 72(7) protects from the claw back of s. 72(1) that part of a policy’s proceeds needed to satisfy the deceased’s obligations to the spousal and child support recipients, calculated in accordance with the support orders in place at the time of his death. I reach this conclusion in the following way.

Under both the FLA and the Divorce Act, a court can secure the payment of support obligations by formally granting a charge against property. However, the jurisprudence discloses that the more common practice is for a court to order a support payor to designate the support recipient as the irrevocable beneficiary under a life insurance policy. While colloquially such an order is described as one that “secures” payment of the support obligations in the event of the payor’s death, it would be more accurate to say that such an order makes available a pool of money — the proceeds of the life insurance policy — to satisfy the support payor’s obligations calculated in accordance with the support orders in place at the time of his death.  [Emphasis added.]

The court was clear, however, that not all life insurance requirements described in separation agreements are intended simply as “security” for support payments.  At para. 83, Brown J.A. stated:

Second, [the support recipient]’s rights as a creditor of the deceased in respect of the Policy for the purposes of s. 72(7) flow from court orders. Those rights can be no greater than what the courts could confer under such orders. Under the FLA and Divorce Act, courts only have the jurisdiction to order life insurance beneficiary designations to the extent needed to satisfy support obligations. Such orders can provide no greater protection in the face of a competing claim to the policy’s proceeds by a claimant under Part V of the SLRAShould parties intend a life insurance policy to operate as a kind of “stand alone” benefit upon the payor’s death, not linked to his obligation to pay child or spousal support, it is open to them to strike such a bargain and memorialize it in a separation agreement: Turner v. DiDonato, 2009 ONCA 235 (CanLII), 95 O.R. (3d) 147, at para. 38. [Emphasis added.]

Thus, I must determine whether or not the life insurance clause in the Birnies’ Separation Agreement was intended to act as a pool of funds to “secure” Mr. Birnie’s spousal support obligations or whether it is a “stand alone” benefit as described in Turner v. DiDonato.”

         Birnie v. Birnie, 2019 ONSC 2152 (CanLII) at 27-30

April 8, 2022 – Contribution by Child Towards Post-Secondary

“The Father submits that Madison should be required to contribute $2,000 of her own earnings towards her education. He also points out that her student loan covered almost all of her educational costs. The Mother believes the Father should have to pay, irrespective of the student loan, as it would not have been necessary had he contributed.

It is well established that a child should contribute to their own education to the best of their ability. They do not have to contribute every cent they earn, but their earnings must be considered and balanced with the income of their parents: Lewi v. Lewi (2006), 2006 CanLII 15446 (ON CA), 80 O.R. (3d) 321 (C.A.), at paras. 39-42.

In addition, when determining the proper expense to be paid, the court is to consider any subsidies, benefits or income tax deductions or credits received: s. 7(3), Guidelines. A student loan is not considered a “benefit” within the meaning of s. 7(3) of the Guidelines: Roth v. Roth, 2010 ONSC 2532, at para. 16(e). The receipt of a student loan by a child will not always eliminate the obligations of a paying parent. The court must determine the reasonableness of taking such loans into account in the circumstances of each case: Coghill v. Coghill (2006), 2006 CanLII 28734 (ON SC), 30 R.F.L. (6th) 398, at para. 44; Roth, at para. 16.

Generally, the courts will only require a child to contribute to their education by taking out and assuming responsibility for student loans as a last resort, where the means of the child and those of the parents are insufficient to cover the child’s education and living expenses: Naveed v. Nasir, 2016 ONSC 7878, at para. 45.

Madison should be commended for her hard work and her contributions to her education. This skill will bode well for her in the future. Given her earnings, it is only reasonable that she contributes her share. The sum of $2,000, as suggested by the Father, is a reasonable contribution.”

         Jackson v. Jackson, 2021 ONSC 2614 (CanLII) at 58-62

April 7, 2022 – Non-Party Disclosure

“The importance of relevant financial disclosure in family law cases is well-recognized.  Delays in disclosure impede the progress of an action, act to the disadvantage of the opposite party, and impact the administration of justice: see Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6, at paras. 11-12.

When a spouse controls a corporation and their income is necessary to determine the amount of child support, the Guidelines require that the payor spouse provide the other spouse with corporate documents.  Those documents include, for the corporation’s three most recent taxation years: the financial statements of the corporation and its subsidiaries; and a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the corporation, and every related corporation, does not deal with at arm’s length: see ss. 21(2) and 21(1)(f) of the Federal Child Support Guidelines, SOR/97-175.

When a spouse is a shareholder, director or officer of a corporation, the pre-tax income of that corporation is relevant to the determination of their annual income. If the court is of the opinion that the amount of the spouse’s income does not fairly reflect all of the money available to the spouse for the payment of child support, the court may include all or part of the pre-tax income of the corporation. All amounts paid by the corporation as salaries, wages, management fees, or other payments or benefits to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances: see s. 18 of the Guidelines.

If the payor spouse does not control the relevant corporation, there are two provisions of the Family Law Rules, O. Reg. 114/99, that permit the court to make orders for document disclosure from a non-party:

i.    If a document is in a non-party’s control that is not protected by a legal privilege, and it would be unfair to a party to go on with the case without the document, the court may order the non-party to produce the document to the party: Rule 19(11).

ii.    The court may order a non-party to disclose information where:

a.    it would be unfair to the party who wants the disclosure to carry on with the case without it;

b.    The information is not easily available by another method; and

c.    The disclosure will not cause unacceptable delay or undue expense: Rule 20(5).

On this motion, the onus is on the mother to satisfy the court that production should be ordered: see Weber v. Merritt, 2018 ONSC 3086, 11 R.F.L. (8th) 177at para. 29.

Non-party disclosure in family litigation is generally more permissible than under the Rules of Civil Procedure, and judges should exercise “liberal and generous discretion” in ordering non-party disclosure in the family context. This is because it is common in family litigation for parties to make use of close family members for purposes of concealing income or assets: see Weber at para. 33; Hagey-Holmes v. Hagey, 2005 CanLII 23324 (ON SC), [2005] O.J. No. 2760 (Ont. S.C.), at para. 32.

It is not uncommon in the family law context for family members and their businesses to align themselves to support and protect a family member defending a property or support claim: see Weber at para. 34; Loeb v. Loeb, 2013 ONSC 1730, 34 R.F.L. (7th) 149, at para. 42.”

         Hohl v. Hohl, 2021 ONSC 2182 (CanLII) at 20-26

April 6, 2022 – Relaying Messages Through Children

“It is clear to the court based on the evidence filed that the respondent has been the parent who makes and takes the children to their doctor’s appointments and specialist appointments both prior to and after separation.  It is further clear to the court that the lack of communication between the parties is primarily due to the applicant’s refusal to communicate with the respondent.  I find that the lack of communication (or miscommunication) regarding the applicant’s recent trip to Pakistan was due solely to the applicant’s lack of respectful communication with the respondent.

The applicant should have known better and should have acted in a more mature manner to clarify the plans for the children to remain in the respondent’s care during his absence.  He should have provided the respondent with clear contact information so they could plan some phone calls between him and the children during his absence.  Sofia is just 8 years old and Ayesha is just 5 years old.  Neither of them is of the age or maturity to relay any messages to their parents, let alone a message about their father’s trip to Pakistan.  The children are further not equipped to take responsibility for a cell-phone and plan out long distance phone calls and messaging with their father while he was away.

To be crystal clear, NEITHER PARENT SHOULD EVER RELAY MESSAGES TO EACH OTHER THROUGH THE CHILDREN.

Based on the evidence filed and the above reasons, I find that there is sufficient evidence to satisfy the court that it is in the best interests of the children to make a temporary order granting the respondent decision making responsibility for both children.”

         Naeem v. Naeem, 2021 ONSC 2521 (CanLII) at 12-15

April 5, 2022 – Providing Medical Disclosure

“The Respondent requests that the Applicant be required to provide disclosure regarding S.H.’s medical history and conditions. Under the Personal Health Information Protection Act, 2004, S.O. 2004, c. 3, Sched. A, S.H.’s health information can only be disclosed with her consent. The Applicant cannot produce that information to the Respondent without S.H.’s written authorization.

Section 23(1) of the Personal Health Information Protection Act provides:

          Persons who may consent:

23(1) If this Act or any other Act refers to a consent required of an individual to a collection, use or disclosure by a health information custodian of personal health information about the individual, a person described in one of the following paragraphs may give, withhold or withdraw the consent:

          1. If the individual is capable of consenting to the collection, use or disclosure of the information,

i.     the individual, or

ii.     if the individual is at least 16 years of age, any person who is capable of consenting, whom the individual has authorized in writing to act on his or her behalf and who, if a natural person, is at least 16 years of age.”

            M.M.D. v. J.A.H., 2019 ONSC 2208 (CanLII) at 54-55

April 4, 2022 – Determining “Success” On Costs

“Mr. Kraemer relies upon the case of Takhar v. Takhar, 2009 CarswellOnt 8172 to submit that since success has been divided, there should be no costs.  I prefer to rely upon Thompson v. Drummond, 2018 ONSC 4762 where Chappell J. said that the determination of success is not a simple mathematical exercise: “Rather, it requires a contextual analysis that takes into consideration the importance of the issues that were litigated and the amount of time and expense that were devoted to the issues which required adjudication…”.

         Kraemer v. Kraemer, 2019 ONSC 2072 (CanLII) at 6

April 1, 2022 – Maximum Contact

“The principle that a child should have as much contact as possible with each parent remains a part of the court’s best interests considerations. However, the Divorce Act’s previous reference, in the heading to the relevant section, to “maximum” contact has been removed. However, the operative terms in the section remain the same.

Whether “as much contact as possible” or “maximum”, the notion of ensuring that a child enjoys as much contact with each parent as is consistent with their best interests remains an important consideration for the determination of their parenting time.

The present provision, s. 16(6) states:

Parenting time consistent with best interests of child

(6) In allocating parenting time, the court shall give effect to the principle that a child should have as much time with each spouse as is consistent with the best interests of the child.

The previous provision stated:

Maximum contact

(10) In making an order under this section, the court shall give effect to the principle that a child of the marriage should have as much contact with each spouse as is consistent with the best interests of the child and, for that purpose, shall take into consideration the willingness of the person for whom custody is sought to facilitate such contact.

Whether this change in the heading is merely semantic remains a point to be argued. The point was not raised before me. However, I note that in Rigillio v Rigillio, 2019 ONCA 548, the Court of Appeal for Ontario found that a court’s failure to advert to what was then the maximum contact principle represented an error in law. Any judge who departs from the principle must provide reasons for doing so. Implicit in that principle is the notion that those reasons must be in a child’s best interests.

Despite the changed wording of the heading and any potential implications, it remains necessary for any court making a parenting decision to avert to the s. 16(6) principle.”

         Phillips v. Phillips, 2021 ONSC 2480 (CanLII) at 49-54

March 31, 2022 – Matrimonial Home & Writs of Execution

“The matrimonial home occupies a special place in family relations: Bank of Montreal, at p. 113. Sections 21 and 23 of the FLA are intended to protect the interests of spouses in matrimonial property by prohibiting unilateral dealings that threaten to interfere with their interest: see Walduda v. Bell (2004), 2004 CanLII 4037 (ON SC), 7 R.F.L. (6th) 205 (Ont. S.C.), at para. 14.

While a writ of execution may be an “encumbrance” within the meaning of that term in ss. 21 and 23(d) of the FLA, there is an issue as to whether, and in what circumstances, a writ of execution by a third-party creditor can be an “encumbrance” by a spouse. Under s. 23(d) of the FLA, the court may set aside a transaction encumbering an interest in a matrimonial home, and revest the interest if the encumbrance occurred contrary to s. 21(1) – that is, contrary to the prohibition against a spouse encumbering the interest without the consent of the other spouse. Therefore, to engage this section, the spouse must have done something to directly encumber the interest in the matrimonial home. As such, this provision does not typically apply to executions by third-party creditors: see Maroukis v. Maroukis, 1984 CanLII 76 (SCC), [1984] 2 S.C.R. 137, at p. 144.

It is unnecessary in this case to determine whether there are circumstances in which ss. 21 and 23 of the FLA would apply to an execution by a third-party creditor. Assuming, without deciding, that these provisions could be available to permit the court to stay an execution by a third-party creditor, they would only be available where the court can conclude that, by virtue of the execution, the spouse effectively encumbered the interest in the matrimonial home.

For example, in Walduda the spouse borrowed money from her sister to fund the litigation against her husband – knowing that she would be unable to repay the debt – and then consented to judgment in the action to recover the debt. In these circumstances, the application judge found that the spouse had entered into the transaction with the intent of tying up the interest in the matrimonial home. The spouse used the third-party transaction to encumber the matrimonial home, thereby doing indirectly what she could not do directly.

In this case, and unlike the spouse in Walduda, Robert did not execute the promissory notes that led to the judgment for the purpose of tying up Nicole’s interest in the matrimonial home. As noted by the trial judge in the Civil Action, the debts behind the promissory notes were “legitimate marital debts”. Moreover, there is no evidence that Robert was using the debt he owed Harold to encumber OFH. Harold did not consult or confer with Robert before he sued or executed on the judgment and Robert chose not to defend Harold’s claim only after obtaining legal advice that led him to believe that there were no valid defences to Harold’s claim. The fact that Harold knew of Nicole’s interest in the matrimonial home is not sufficient to engage s. 21(1) of the FLA. Speaking of a comparable provision under Nova Scotia’s legislative framework, Bryson J.A. noted that it “contemplates some positive act by an owner that grants an interest to a third party”, and he concluded that third party judgments would not be caught “merely because a creditor knows that a debtor owns a matrimonial home”: Hurst v. Gill, 2011 NSCA 100, 342 D.L.R. (4th) 583, at paras. 65-66.

In my view, the requirements of s. 23(d) of the FLA were not met in this case because Harold’s writ of execution was not an encumbrance of the matrimonial home by Robert. As such, the trial judge ought not to have stayed the writ of execution under that provision.

Nevertheless, as I will explain, the stay of the execution of Harold’s judgment was justified under s. 106 of the CJA. Section 106 provides that “[a] court on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just”. This general authority of the court to stay a proceeding can be applied to the enforcement of a judgment. See Zanetti Estate v. Roltford Developments Ltd., [1990] O.J. No. 2584 (S.C.); Buttarazzi v. Buttarazzi (2009), 2009 CanLII 80136 (ON SC), 84 R.F.L. (6th) 240 (Ont. S.C.); and 1247902 Ontario Inc. v. Carlisle Power Systems Ltd., [2003] O.J. No. 6300 (Div. Ct.), at para.10, aff’d 2005 CanLII 691 (Ont. C.A.).”

         Peerenboom v. Peerenboom, 2020 ONCA 240 (CanLII) at 24-30

March 30, 2022 – Difference Between a Review & a Variation

“First, the appellant is correct that there is a difference between a “review” and a “variation”. A review permits an order to be revisited without a threshold determination of a material change in circumstances, while a variation includes a burden to establish changed circumstances, as required by s. 17(4.1) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.): Leskun v. Leskun, 2006 SCC 25, [2006] 1 S.C.R. 920, at paras. 35-37. That said, once the threshold to vary the existing order is met, both a review and a variation of spousal support consider the same objectives: those that are set out explicitly at ss. 15.2(6) and 17(7) of the Divorce Act.”

         Cvetkovic v. Cvetkovic-Gorovic, 2021 ONCA 193 (CanLII) at 8