Law Times

PAGE 10 FOCUS June 20, 2011 • Law Times What is appropriate lump-sum support? Court considers key issue for family lawyers in Pollitt v. Pollitt BY ROBERT TODD Law Times A recent Ontario Supe- rior Court decision of- fers crucial details for the bar in relation to the cal- culation of lump-sum spousal support payments. Th e case, Pollitt v. Pollitt, is also unique in that it involved a husband who was terminally ill with cancer and possessed a net worth pegged at about $20 million before he began divest- ing assets to his children. Karon Bales of Bales Beall LLP, who represented husband Murray Pollitt, notes the stakes were "quite high" for her client. Th e man's ex-wife, Lydia Pol- litt, sought a variation of the terms of the separation agree- ment and divorce judgment for both child and spousal sup- port. Th e claim went back to the date of the original agree- ment in 2002. "Th e amendments were siz- able," says Bales. Th ere were also a number of issues related to the calculation of the husband's income for support purposes and whether the calculation for child sup- port should diff er from the ap- proach to spousal payments. But the principal issue that Ontario Superior Court Jus- tice George Czutrin was tasked with handling, says Bales, was in regard to the earnings of the company of which the hus- band was a majority owner. Th e main complications were in relation to the sale of shares on the Toronto and Montreal stock exchanges. In the end, Czutrin ruled those funds were non-recur- ring and, as per the child support guidelines, would be the non-recurring income, would be the same. Another complication for the calculation of payments was due to paper gains that came from the reorganization of a family holding company. Th e judge again found that those earnings wouldn't be included in the husband's income. "We were very happy with The quantum of the lump sum is subject to appeal, says Karon Bales. excluded from his income for support purposes. In addition, the judge found that the calcu- lation of income for child and spousal support, dealing with that result," says Bales. "Th ese non-recurring gains, each one is a bit diff erent. But his hon- our basically followed our sub- missions with respect to how the decision in the [Alberta Court of Appeal's Ewing v. Ewing case] should be applied in analyzing whether or not a gain was non-recurring. It was the fi rst time there'd been an extensive review of that by an Ontario court." Another key aspect of the case, according to Bales' co-counsel Charles Beall, was with respect to the handling of assets the husband distrib- uted to his adult children. Af- ter being diagnosed in 1999, the husband issued gifts to his children as part of his estate plan. Czutrin ruled that was permissible. "Th ere was nothing nefari- ous, and it was appropriate for Mr. Pollitt to take some estate- planning steps and distribute as- sets to his children in light of his personal situation," Beall notes. Meanwhile, Czutrin ruled that the retroactive child support would go back to the year after the agreement, yet retroactive spousal payments would date back only to the fi rst time the wife could demonstrate she had made a request for disclosure. Th e court also addressed the THE ESSENTIAL REFERENCE FOR FAST ANSWERS IN COURT issue of lump-sum versus ongo- ing monthly spousal support payments. While there was some discussion between parties on the topic, Czutrin ultimately ruled the husband would pay the wife a lump sum of slightly more than $1 million. "Given that Mr. Pollitt has already dealt with much of his estate and his health, he has the ability to more than ad- equately meet his needs," the judge wrote. "I am satisfi ed on the evi- dence that he planned for and contemplated that he would need to satisfy the original di- vorce judgment and left enough for himself to meet his needs and the amount that would otherwise be payable under the divorce judgment." Meanwhile, Bales says, "We NEW PUBLICATION FAMILY LAW LITIGATION HANDBOOK GARY S. JOSEPH, PHYLLIS BRODKIN, WILLIAM H. ABBOTT, GEORGINA CARSON, GEOFFREY WELLS, MICHAEL STANGARONE (MacDONALD & PARTNERS LLP) Whether you're in court or meeting with clients, opponents, or mediators, this portable guide gives you fast answers when you need them. Get the practical information that helps you navigate family law litigation procedures, region-specific rules and child and spousal support guidelines. The Family Law Litigation Handbook is the courtroom companion you can rely on when a Judge, opposing counsel or colleague needs a quick reference or an answer to a question raised in argument. ORDER # 982905-61301 $99 Softcover 280 pages December 2010 978-0-7798-2905-7 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. AVAILABLE RISK-FREE FOR 30 DAYS Order online at www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 don't agree with the quantum of the lump sum, and that's the subject of an appeal. . . . Th ere aren't that many lump-sum awards." Harold Niman of Niman Zemans Gelgoot LLP repre- sented the wife. He character- izes the case as a "long, drawn- out process" and suggests Czutrin's ruling is important for the bar at large as it relates to the size of the lump-sum payment awarded to the wife. "Th e lump-sum payment was so high in terms of the reported cases," says Niman. "And how justice Czutrin cal- culated is very important for the bar to see all of the factors that were taken into account and most importantly the kind of evidence you're going to need to lead if you're going to be requesting a lump sum." Niman points out that judges are often forced to do their own calculations or speculate on a reasonable lump sum. But in Pollitt, Czutrin asked for and re- ceived the evidence he needed to assess the appropriate amount. "So it was interesting from the point of view of a trial judge specifi cally asking coun- sel to obtain and produce the evidence he would need," says Niman. Untitled-5 1 www.lawtimesnews.com 6/14/11 12:12:39 PM

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