A Vancouver based real estate agent has used the recent housing volatility and resultant impact on the market to argue that the luxurious lifestyle his family previously enjoyed was unsustainable and that his spousal support obligations should be decreased.
The Parties’ Relationship
The former couple began to live together in 1998 and married in 2000. Throughout their marriage they enjoyed what the court described as a “luxurious lifestyle” which included expensive memberships in two country clubs, as well as annual vacations to Hawaii, Las Vegas, Los Angeles, travel to Europe, and private school education for their children. The couple were married for almost 17 years before ultimately separating in 2017.
The husband is a well-known realtor in the Vancouver area and is the sole shareholder of a realty company.
The wife is a qualified real-estate agent, but did not work during the marriage, and instead acted as the primary caregiver to the former couples’ children while the husband developed his successful business. She sometimes worked part-time, arranging open houses and otherwise assisting in the business.
Following their separation, the wife was receiving $10,000 monthly as a form of income splitting. In addition, the husband was paying $8,000-$9,000 monthly for expenses related to the couple’s former matrimonial home and his company continued to pay for the wife’s car lease and insurance policy (totaling approximately $3,400 per month).
The Wife’s Position
The wife argued that it would not be appropriate to depart from the Spousal Support Advisory Guidelines given the lifestyle the couple enjoyed pre-separation and based on her ongoing expenses. She claimed that she was entitled to spousal support at the high end of the SSAG.
The Husband’s Position
The husband argued that deductions should be made to his spousal support obligations. The noted that it would be “devastating” to him if his income for support purposes was based on an average of his company’s past three years of net income since the real estate market slowed down from 2016 to 2017 and would likely continue to slow in 2018. Things such as the foreign buyers’ tax, the tightening of residential mortgage rules, and increases to interest rates all resulted in general uncertainty that had impacted the market and therefore, his income.
The husband further noted that he expected that his 2018 income would be roughly the same as it was in 2017 and that the court should consider the uncertainty and variability of his income when determining the proper amount of spousal support owing.
He additionally noted that he would have to support his company’s expenses in months when commissions would be low, and that “caution should be exercised” so that he could maintain flexibility in times when his income did not keep pace with what it had been in past years.
Lastly, the husband argued that the standard of living that the parties enjoyed in the past was unsustainable and had exceeded their ability to pay.
The Decision
Husband’s Income
The court concluded that the husband’s income should not be based on the average of his realty company’s net income for the three years preceding this dispute, since:
…[t]here is no evidence to suggest that the real estate market going forward will be as favorable as it was pre-2017.
The court further noted that the husband had reason to be pessimistic about the real estate market and his income. The court did also caution, however, that it was reasonable to assume that much of the impact of the changes to the real estate market pointed out by the husband were already reflected in the market, and therefore set the guideline income for the purposes of the dispute at a relatively high $1,010,914.
Spousal Support
The court pointed out that since the husband’s income was more than $350,000, the court had significant discretion with respect to determining the appropriate amount of spousal support, including determining whether the amount established by the SSAGs was appropriate.
The court concluded that, given the circumstances, a complete departure from the SSAGs was not warranted. Rather, a “conservative approach” militated in favour of spousal support at the low end of the range.
The court ordered that interim spousal support in the amount of $22,960 was appropriate, and would:
…allow the parties to decide which expenses, other than those for the former family home, they will have to sacrifice in order for them to live in the reality of a reduced income and the increased expenses that separation brings.
In addition, the parties were further ordered to share responsibility for the mortgage, taxes, and municipal fees in accordance with their respective incomes, on an interim basis.
Lessons Learned
Applications for interim spousal or child support are generally made in circumstances in which the needs of a family, and the ability of a payor spouse are not fully known or are changing. The needs of the parties, and the ability of the payor spouse to pay are challenging to determine in such cases. Here, the court considered how the highly fluctuating real estate market could potentially affect the husband’s ability to maintain a specific level of support.
Spousal support disputes can get complicated and emotional and require guidance from family lawyers with experience advising clients on such matters and representing them in any mediation or litigation that may result. At Gelman & Associates, our knowledgeable, family law lawyers provide clients with the information they require to make educated decisions about spousal support. If necessary, we will also litigate on your behalf to ensure the best possible outcome of your case. With six offices throughout Aurora, Barrie, Downtown Toronto, Mississauga, North York and Scarborough, we are easily accessible by transit and off-highway. Our phone lines are open Monday to Friday from 8 AM to 8 PM. Call us at (416) 736-0200 or 1-844-736-0200 or contact us online for an initial consultation.
