



COURT OF APPEAL FOR ONTARIO

CITATION: Pustai v. Pustai, 2018 ONCA 785

DATE: 20180927

DOCKET: C64351

Hoy A.C.J.O., van Rensburg and Pardu JJ.A.

BETWEEN

Scott Timothy Pustai

Applicant (Respondent)

and

Christine Marie
    Pustai

Respondent (Appellant)

Michael H. Tweyman, for the appellant

Stephen P. Kirby and Gary S. Joseph, for the respondent

Heard: July 16, 2018

On appeal from the final order of Justice H.K. OConnell
    of the Superior Court of Justice, dated August 30, 2017.

van Rensburg J.A.:

Overview

[1]

This is a family law appeal. In dispute are the
    variation and termination of spousal support.

[2]

The appellant Christine Pustai appeals a
    judgment after trial of a motion to change brought by the respondent Scott
    Pustai. The judgment, dated August 30, 2017, varied a 2008 consent order following
    a settlement the parties had concluded after several years of litigation. The
    judgment reduced monthly spousal support from $3,000 to $1,000 effective June
    1, 2013, and terminated spousal support one year later. The judgment also
    required Ms. Pustai to pay Mr. Pustai one half of the net proceeds from the
    sale of the matrimonial home in 2010 as consideration for her contribution to
    s. 7 expenses for child support up to the date of the consent, and dismissed
    Mr. Pustais claim for child support and s. 7 expenses. The judgment also
    provided for the payment of funds by Mr. Pustai to Ms. Pustai for the purchase
    of a vehicle, which is not subject to appeal.

[3]

For the reasons that follow I would allow the
    appeal. Briefly, while I agree that it was open to the trial judge to conclude
    that there was a material change in the Ms. Pustais financial circumstances,
    in my view, the trial judge erred when, after finding that Mr. Pustais income
    had remained consistent since 2008, he determined that Mr. Pustais financial circumstances
    had materially changed. Further, the trial judge did not conduct the required
    analysis before substantially reducing and then terminating spousal support. Specifically,
    he did not assess the material change in circumstances in the context of the parties
    January 2008 settlement, the consent order and a companion trust agreement.
    Applying the proper analysis, spousal support should be reduced, but not
    terminated. As for the matrimonial home and s. 7 expenses, the trial judge
    misapprehended the evidence. The parties agreed that Ms. Pustai was to become
    the owner of the matrimonial home and entitled to all of the proceeds, and they
    conducted themselves accordingly. Mr. Pustais apparent interest in the home
    was a fiction, designed to avoid payment of Ms. Pustais legal and accounting
    fees. As such, Mr. Pustai is not entitled to any proceeds from the sale of the
    matrimonial home.

Facts

[4]

The parties married in 1989 and separated in
    2001 after 11.5 years of marriage. They divorced in April 2003. At the time of
    their separation there were four children of the marriage. At all relevant
    times, Mr. Pustai has been the 90% owner of a trucking business, Total
    Transport Solutions (his companies are referred to as TTMI). Ms. Pustai did
    not work outside the home.

(1)

The Parties 2008 Settlement

[5]

After six years of litigation, in 2008, custody
    and access were resolved on consent: Ms. Pustai was to have custody of one
    child, and Mr. Pustai custody of the other three children. The parties entered
    into minutes of settlement dated January 16, 2008. Some of the terms of the
    minutes of settlement were incorporated into the final consent order of Lack J.
    dated February 21, 2008. The relevant parts of the final order are as follows:

1.

Based on an imputed income of $155,800.00, the
    [respondent] shall pay to the [appellant] base child support of $1,297.00 per
    month for the support of [the one child] commencing March 1, 2008, and on the
    first day of each month thereafter.

2.

The [respondent] shall pay to the [appellant]
    spousal support in the sum of $3,000.00 per month commencing March 1, 2008 and
    on the first day of each month thereafter. There shall be no termination date
    for spousal support. Either party may ask for a review of the quantum of
    support upon a material change in circumstances

3.

The [appellant] shall transfer her one-half
    interest in the former matrimonial home to the [respondent] as lump sum child
    support for the support of [the three children in the respondents custody]
    inclusive of section 7 expenses including University/College expenses.

4.

The [appellant] shall have the right to occupy
    the former matrimonial home indefinitely. The [appellant] shall pay all costs
    associated with the home, including, but not limited to mortgage payments,
    taxes, utilities, cable, telephone, insurance, repairs and upkeep. At no time
    shall the [respondent] be entitled to force the sale, transfer or further
    encumbrance of the home

5.

There shall be no further payment to either
    party on account of equalization, costs, disbursements, interest owing for any
    monies prior to January 14, 2008, retroactive child support or retroactive
    spousal support.

[6]

The January 2008 minutes of settlement also provided
    for a payment by Mr. Pustai to Ms. Pustai of $100,000 in full satisfaction of
    any monies owing for equalization, retroactive spousal support and costs, and a
    further payment of $25,000 on or before March 15, 2008. These amounts were to
    be neither taxable to Ms. Pustai nor tax deductible to Mr. Pustai. The parties
    agree that these amounts were paid and form at least a part of their overall
    settlement.

[7]

Contemporaneous with the minutes of settlement,
    the parties signed a secret trust agreement which provided:

I, Scott T. Pustai, hereby acknowledge that
    the property located at [address of the former matrimonial home], as well as
    the Chevy Suburban, is being held by me Scott T. Pustai in trust for Christine
    Pustai and that I have no beneficial interest in the property.

At Christine Pustais sole discretion, I hereby
    agree to transfer, sell, encumber or deal however Christines [sic] wishes with
    the property at her request and sole discretion.

[8]

By the time the parties settled their
    matrimonial litigation, only Mr. Pustai was represented by legal counsel. TTMI
    had been valued after arbitration at approximately $1.1 million, and it was a
    term of the settlement that Mr. Pustai would abandon his appeal of the arbitration
    award.

[9]

In an action by Ms. Pustais counsel for payment
    of legal and accounting fees, Pollak J. determined that, on Mr. Pustais
    initiative, both parties had colluded to evade the payment of Ms. Pustais
    legal fees. To this end, on the eve of the appeal of the TTMI arbitration, Ms.
    Pustai had terminated her counsels retainer. At the same time, she had
    transferred the matrimonial home to the respondent subject to the trust
    agreement. All of this was done as part of the parties plan to avoid paying
    Ms. Pustais legal fees:
Pellman v. Pustai
,
    [2009] O.J. No. 4412 (S.C.), at paras. 4 and 5.

(2)

The 2008 Motion to Change

[10]

Mr. Pustai brought his first motion to change
    only eight months after Lack J.s consent order. He was seeking to terminate
    spousal support and to require Ms. Pustai to pay child support.

[11]

Mr. Pustai argued that there were two material
    changes in the parties circumstances. First, the child who had been in Ms.
    Pustais custody went to live with him in July 2008. Second, he asserted that
    his financial position had deteriorated  that his business was showing
    substantial losses and that he had to borrow money or use gifts of money to
    make ends meet.

[12]

On August 5, 2009, after a trial, Magda J.
    dismissed the motion to change. Given that Mr. Pustais actual 2008 income was
    virtually identical to the income imputed to him in the 2008 consent order, the
    trial judge did not accept his testimony that his business was showing
    substantial losses and that he was using borrowed or gifted monies to make ends
    meet. Magda J. also concluded that the change in residence of the one child,
    that terminated Mr. Pustais child support obligation, was reasonably foreseeable
    at the time of the consent order and so did not constitute a material change.
    In the course of his reasons, Magda J. stated at para. 16 that in his view:

from the wording
    of paragraph 2 of the [Lack J.] order, [Ms. Pustai] has the reasonable
    expectation that her spousal support entitlement shall continue with no
    termination date. I think she understands that if there is a substantial or
    significant diminution of the applicant fathers income through no fault of his
    own, that there may be grounds to establish a material change in circumstances
    which may reduce, but not terminate, her spousal support.

[13]

Magda J. also observed that, by the time of the
    trial, Mr. Pustai had abandoned his claim for child support and s. 7 expenses, as
    had Ms. Pustai her claim for increased spousal support.

[14]

Mr. Pustai appealed the order of Magda J. (the
    2010 Appeal). In reasons reported at 2010 ONCA 251, this court held that Mr.
    Pustai could not argue that a mere eight months after the consent order, the
    trial judge had erred in not setting a termination date for spousal support and
    in not imputing income to Ms. Pustai. Not enough time had passed for such
    circumstances to yet be assessed as a possible material change in
    circumstances. The court further stated that, [t]he trial judge did not err in
    finding that the consent order provided that only the quantum but not the duration
    of spousal support could be subject to variation (at para. 4). The court
    dismissed the appeal.

(3)

The 2010 Motion to Change

[15]

Mr. Pustai again sought an order terminating
    spousal support, this time as of September 1, 2010, and for a contribution toward
    s. 7 expenses for three children. The grounds were that the matrimonial home
    had been sold with Ms. Pustai receiving all the proceeds, an alleged downturn
    in the business of TTMI, and that Ms. Pustai had made no attempt to obtain
    employment, or alternatively that she had undisclosed income.

[16]

There were two trials of the motion to change.
    The first resulted in a final order dated December 7, 2012, that was set aside
    on appeal.

a)

First Trial and Appeal of the 2010 Motion to Change

[17]

The first trial proceeded before Rowsell J.
    Briefly, the trial judge accepted that by this point  now 4.5 years after the
    consent order  the change to Mr. Pustais annual income from the imputed $155,000
    to $126,530 was a material change of circumstance. He also drew an adverse
    inference from Ms. Pustais failure to disclose bank accounts and refusal to
    provide credit card statements to explain her financial situation. He imputed
    income of $31,000 per year to Ms. Pustai based on imputed minimum wage income
    plus rental income that he found she was receiving. He terminated her spousal
    support effective June 1, 2013, and ordered that she pay child support and 20%
    of s. 7 expenses commencing July 1, 2013 based on her imputed income.

[18]

This final order was set aside on appeal (the
    2014 Appeal). In its decision reported at 2014 ONCA 422, this court concluded
    that the trial judge had failed to apply the proper analysis required in a
    motion to change under
L.M.P. v. L.S
., 2011
    SCC 64, [2011] 3 S.C.R. 775 and
Miglin v. Miglin
, 2003 SCC 24.

[19]

Rouleau J.A. concluded that the trial judge
    erred when, after finding a material change in circumstances, he all but
    ignored the fact that the parties had entered into a comprehensive settlement
    leading to the original consent order in February 2008. The trial judge ought
    to have tied his analysis to the actual circumstances of the parties at the
    time of the consent order and to have taken as a starting point the parties
    agreement in February 2008. This agreement included support payments of $3,000
    per month with no end date. Rouleau J.A observed that an analysis of the
    circumstances at the time of the February 2008 consent order was required in
    order to determine whether the changes [the trial judge] had identified were
    sufficient to bring the support payments to an end less than five years after
    reaching that agreement (at para. 28).

[20]

This court also concluded that the trial judge
    erred in making an order for child support without assessing the impact of the
    trust agreement, the settlement, and the consent order, on the parties
    interests in the matrimonial home (at para. 33).

[21]

A new trial was directed. While finding that the
    trial judges determination that there was a material change in circumstances
    was reasonably supported by the evidence, the court directed that the new trial
    would address anew both the issues of whether there was a material change and
    the determination of the appropriate terms of variation, if any (at para. 29).

b)

Decision under Appeal: Second Trial of the 2010 Motion to Change

[22]

The second trial of Mr. Pustais 2010 motion to
    change was heard by H.K. OConnell J. for 2.5 days in May 2015. In this trial,
    Mr. Pustai sought orders terminating spousal support effective June 1, 2013,
    imputing income to Ms. Pustai, and requiring Ms. Pustai to pay child support or
    in the alternative that the equity in the former matrimonial home be
    transferred to him.

[23]

The trial judge rejected Ms. Pustais argument
    that the Lack J. order foreclosed any change in spousal support by the court.
    The contrary had been decided in the 2010 Appeal. He summarized the reasons of
    Rouleau J.A. and set out the test he was to apply in determining whether there
    was a material change in circumstances and whether the support order should be
    varied or terminated. He observed that he was not foreclosed by the 2008
    bargain from varying or terminating spousal support provided that the evidence
    allows for it on a material change analysis (at para. 68).

[24]

The trial judge accepted Mr. Pustais evidence
    completely as to his financial circumstances. Unlike Rowsell J., he did not
    base his conclusion that there was a material change in circumstances on Mr.
    Pustais annual income. Indeed, he accepted Mr. Pustais evidence at the second
    trial that his income on a year-to-year basis has remained more or less the
    same.
[1]
He accepted that Mr. Pustais debt load had increased (to $230,634.63 in 2015).
    He also accepted Mr. Pustais evidence that he had to take out loans and to
    deplete his RSP to ensure his company could sustain itself, and that TTMI
    required extensive capital injection to procure new tractors. The trial judge also
    observed that the companys fortunes, which define Mr. Pustais income, [were]
    not what they were in 2008 (at paras. 56 to 67).

[25]

The trial judge, like Rowsell J. before him, did
    not find Ms. Pustai credible. He concluded that there had been a material
    change in Ms. Pustais financial circumstances. He rejected as poppycock her
    evidence that her only source of income was spousal support. He pointed to the
    significant vacations she had taken, a completely inaccurate financial
    statement as to the value of her home at the time of trial, and unexplained
    savings of $135,000 in 25 months. He concluded that Ms. Pustai had not made
    proper financial disclosure, that her position in relation to her financial
    statements was ludicrous, contrived and not worthy of serious consideration,
    and he concluded that she must be earning income. He imputed annual income of
    $40,000 to Ms. Pustai (at paras. 73 to 83).

[26]

The trial judge ordered that spousal support would
    decrease to $1,000 a month effective June 1, 2013 and terminate on June 1,
    2014. He stated that this is fair and reflects the economic reality of both of
    these former spouses as it now exists (at paras. 84 and 85).

[27]

The trial judge turned to the issue of child
    support and s. 7 expenses. He referred to this courts direction that he was to
    consider the impact of the trust agreement, the minutes of settlement and the
    order of Lack J. in assessing the issue of child support (at para. 87). He
    rejected the claim for child support and s. 7 expenses after the order of Magda
    J. on the basis that child support going forward had been waived by Mr. Pustai
    (at para. 88). The trial judge then considered Mr. Pustais claim for half of
    $133,737, the net proceeds of sale of the matrimonial home, which was sold in
    June 2010. After concluding that the trust agreement was morally questionable
    as an attempt to defeat a known claimant for legal and expert fees, he
    characterized the trust agreement as a completely collateral document
    superseded by the minutes of settlement and the order of Lack J., which
    provided that Ms. Pustais interest in the home was to be transferred to Mr. Pustai.
    The trial judge concluded that Ms. Pustai was liable to Mr. Pustai for one half
    of the net proceeds of the matrimonial home (at paras. 91 to 104).

Issues on Appeal

[28]

Ms. Pustai argues that the trial judge erred in:

1.

stepping down and then terminating spousal
    support by:

(a)

failing to conclude that spousal support could
    not be changed or terminated;

(b)

finding a material change in her own financial
    circumstances;

(c)

finding a material change in Mr. Pustais
    financial circumstances when his income remained consistent over the years;

(d)

imputing income to her of $40,000 per year; and

(e)

failing to consider the circumstances that
    prevailed at the time of the consent order;

2.

ordering her to pay 50% of the net proceeds of
    sale of the matrimonial home to Mr. Pustai; and

3.

reserving his decision for almost two years and
    then giving inadequate reasons.

[29]

Mr. Pustai asserts that all of the trial judges
    findings were open to him on the evidence and that there was no error in law or
    in his application of the law. Mr. Pustai contends that the trial judge gave
    proper reasons that reflected that he had considered the evidence before him,
    and that there was no prejudice to Ms. Pustai resulting from the delay in
    giving reasons.

Analysis

(1)

Spousal Support

[30]

The standard of review for family support
    decisions is significant deference. This is informed by both the discretion
    involved in making support orders and the importance of finality in family law
    litigation. An appeal court should only intervene where there is a material
    error, a serious misapprehension of the evidence, or an error in law. It is not
    entitled to overturn a support order simply because it would have made a
    different decision or balanced the factors differently:
Hickey v.
    Hickey
, [1999] 2 S.C.R. 518, at para. 12.

a)

Spousal support could be varied or terminated

[31]

In this appeal Ms. Pustai repeats an argument
    that she has been making throughout the proceedings  that the consent order
    precludes any variation or termination of spousal support.

[32]

This argument overlooks the fact that, as the
    trial judge noted, in the 2014 Appeal this court expressly disagreed that the
    terms of Lack J.s order precluded Mr. Pustai from seeking to terminate support.
    That is, Rouleau J.A. noted, at para. 18, that, while this court had determined
    the proper
interpretation
of the terms of the consent
    order in the 2010 Appeal  that the parties agreed that spousal support would
    not terminate  the parties agreement did not prevent a return to court to
    argue a change in circumstances that would warrant a variation including the
    possibility of ending support altogether (referring to
L.M.P.
,

at para. 41).

[33]

I would therefore not give effect to this ground
    of appeal.

b)

There was a material change in Ms. Pustais financial circumstances

[34]

In my view it was open to the trial judge to conclude
    on the evidence before him that there was a material change in Ms. Pustais
    financial circumstances.

[35]

The trial judge concluded that Ms. Pustai had
    not made proper disclosure of her financial circumstances. Unfortunately, Ms.
    Pustais belief that no variation could take place, and that her own financial
    circumstances could not be considered, appears to have continued to inform her
    conduct in the proceedings  including her failure to make proper disclosure of
    her own financial circumstances. Ms. Pustais inadequate financial disclosure
    as well as her admissions that she had previously provided misleading
    information  by omitting the rental income she was receiving  were relevant
    to determining whether she might have additional undisclosed income and
    resources to contribute toward her own support. The trial judge concluded as
    follows at paras. 73 and 74 of his decision:

Ms. Pustai stuck to her guns that the bargain
    was the bargain, that she depends on the $3,000 per month as per the consent
    order, and that that quantum is the only source of income for her.

That is, on this record, poppycock.  She has
    taken significant vacations at least until November 2012, and since that time
    has travelled to Mexico.  Her financial statement is completely inaccurate in
    relation to the value of her home at the time of trial  I adopt what the Court
    of Appeal said at paragraph 12, wherein the evidentiary record before me still
    completely supports the proposition that Ms. Pustais economic fortunes led to
    an increase of some $135,000 in 25 months and that she has failed to disclose
    how this was so.

[36]

Ms. Pustai takes issue with some of the trial
    judges factual findings, saying that he overlooked her contrary evidence on
    these points. In particular, the trial judge concluded that she had not
    explained how she accumulated $135,000 in 25 months, while her evidence at the
    second trial was that she had received about $60,000 in inheritance from her
    mother, by way of her stepfather. She provided bank statements to show that she
    used that amount to pay the down-payment on a rental property, which she
    acknowledged not disclosing in the lead-up to the earlier trial. At the second
    trial, Ms. Pustai also explained that the value of her home at $325,000 in her
    financial statement of January 6, 2015 was a typographical error that should
    have read $525,000. On appeal she points out that the most recent financial
    statement that was filed before the second trial included the correct value of
    the home. Ms. Pustai also asserts that the trial judge improperly focused on
    the value of her capital assets (such as her home and rental property) instead
    of on her income, and that there was no evidence that she was receiving any employment
    income.

[37]

While there are aspects of the trial judges
    findings that are problematic, the core of his conclusion that Ms. Pustais
    financial circumstances had materially changed was that, because of her
    lifestyle, including significant vacations she took and the still-unexplained
    increase in fortunes of some $135,000 in less than three years, she must have
    had undisclosed income. In addition, she had purchased a rental property in
    2011, from which she was receiving income of $10,559.28 per year, she had given
    inconsistent evidence at the two trials about the source of money used to
    purchase the rental property, and she had not fully complied with a court order
    to answer undertakings and to explain why certain questions were refused.

[38]

It was open to the trial judge to impute
    income to Ms. Pustai after he rejected her evidence that her only source of
    income was spousal support. While the ability to impute income in the face of a
    failure to fully disclose is not an invitation to the court to arbitrarily
    select an amount as imputed income (
Drygala v. Pauli
(2002), 61 O.R. (3d) 711, at para. 44), parties must also accept
    adverse inferences that result from their failure to disclose:
Riel
    v. Holland

[2002] O.J. No. 5609, affd. (2003), 67 O.R.
    (3d) 417 (C.A.), at para. 45.


[39]

I would not interfere with the trial judges
    finding of a material change in Ms. Pustais financial circumstances, which was
    open to him on the evidence.

c)

There was no material change in Mr. Pustais financial circumstances

[40]

As for Mr. Pustais financial circumstances, the
    trial judge accepted that his employment income had remained relatively
    consistent throughout the seven years since the consent order was made.
[2]
In finding a material change
    in Mr. Pustais financial circumstances, the trial judge relied instead on Mr.
    Pustais evidence about his debts: $230,634.63 in 2015 which included some
    support arrears, a loan Mr. Pustai took out to acquire RSPs to get a tax break
    to fund equalization, and another loan for $25,000. He also referred to the
    fact that Mr. Pustai had to deplete his RSP to ensure his company could sustain
    itself, and that the company required extensive capital injection by way of the
    procurement of new tractors. The trial judge also accepted that TTMI was not
    doing nearly as well as it had been doing at the time of the consent order.

[41]

In my view the trial judge misapprehended the
    evidence and took irrelevant factors into consideration when he concluded that
    there had been a material change in Mr. Pustais financial circumstances. The
    trial judge treated the issue as one of Mr. Pustais credibility, accepting his
    evidence respecting the downturn in his business, without assessing whether the
    documentary evidence he provided actually supported the assertion.

[42]

First, the evidence did not support the trial
    judges conclusions about TTMIs financial performance. Although the business
    had one very bad year in 2010, its revenues, as reported in the consolidated
    financial statements, have remained relatively consistent over the years. In
    any case, there is nothing in the state of the company that in my view itself
    supports a material change in circumstances.

[43]

Second, the fact that Mr. Pustai had accumulated
    debt did not in the circumstances demonstrate a material change in his
    financial circumstances for the purpose of spousal support. Indeed, the
    evidence demonstrated that many of Mr. Pustais personal expenses (including
    legal fees) are paid by TTMI, which he attributes to repayments by TTMI of
    monies he has advanced to the business (although this is not reflected in any
    change to his recorded shareholding or shareholder loans). The trial judge
    described Mr. Pustais debt as including spousal support arrears and monies
    borrowed to invest in RSPs to get a tax break to fund equalization (and not as
    monies Mr. Pustai has borrowed personally to fund the business). As for the
    trial judges reference to Mr. Pustais depletion of his RSP to ensure the
    company could sustain itself, considering Mr. Pustais non-arms length
    relationship to the company, as well as the fact that Mr. Pustai acquired a
    corresponding debt owed to him from TTMI, I would say that this too does not rise
    to a material change in Mr. Pustais ability to pay support.

[44]

Perhaps most importantly, even if there was a
    downturn in TTMIs business, there was no evidence that the value of TTMI was
    less at the date of trial than it was when the parties concluded their
    settlement in 2008. Were it to his benefit to enter into evidence an updated
    valuation of TTMI showing a substantial decrease in value, Mr. Pustai could
    have done so. Mr. Pustais income has remained relatively constant. And while
    it is not evident on the record what led to the imputation of additional income
    at the time of the consent order, the onus was on Mr. Pustai to lead evidence
    as to why the factors leading to the imputation of income in the original order
    had changed:
Trang v. Trang
, 2013 ONSC 1980,
    29 R.F.L. (7th) 304, at para. 52;
Gray v. Rizzi
, 2016 ONCA 152, 129 O.R. (3d) 201, at para. 34. Mr. Pustai led no
    such evidence. Given that TTMI has continued to generate a good living income
    for Mr. Pustai, and having regard to the bargain between the parties, the
    evidence does not support a material change in Mr. Pustais financial
    circumstances.

d)

Imputing income to Ms. Pustai

[45]

After concluding that Ms. Pustai had undisclosed
    income, the trial judge did not explain why he imputed an annual income of
    $40,000 to her. Presumably he imputed such income effective in June 2013, as
    that is when he stepped down support.

[46]

As this court stated at para. 44 of
Drygala
    v. Pauli
, at para. 44:

Section
    19
of the
Guidelines
is not an invitation to the court to arbitrarily
    select an amount as imputed income. There must be a rational basis underlying
    the selection of any such figure. The amount selected as an exercise of the
    court's discretion must be grounded in the evidence.

[47]

In this case, the evidence supported imputing
    some amount of income to Ms. Pustai based on the clear evidence of additional
    undisclosed income. In my view, there was however, no rational basis on the
    evidence to impute an income of $40,000.

[48]

Of course, it is difficult
for a party
    seeking to impute income to get to the first step, laying the evidentiary
    foundation, where the party against whom income is sought to be imputed
    makes little or no financial disclosure to the court:
Di Bratto v.
    Sebastiao
, 2015 ONSC 1996, at para. 179.

[49]

I do not agree, however, that that is this
    case.  While Ms. Pustai was at fault for not providing complete financial
    disclosure from the start of these proceedings, this is not a case of egregious
    non-disclosure.

[50]

In my view, taking into account her level of
    education and limited employment-related training, a rational approach would be
    to attribute to Ms. Pustai employment income roughly equivalent to what she
    would earn in a full-time minimum wage position. Between 2013 and 2018, minimum
    wage ranged from $10.25 to $11.40 per hour, before increasing to $14 per hour
    on January 1, 2018. Recognizing that the imputation of income is not an exact
    science and is impeded by Ms. Pustais incomplete financial disclosure, I would
    impute to her annual income from June 1, 2013 of $33,000 from 2013 to 2018 and
    $38,000 commencing January 1, 2018. These amounts include the income Ms. Pustai
    has been able to earn from the rental property she acquired in 2011. I would
    emphasize that this is a rational approach to imputing income having regard to the
    particular circumstances of this case.

e)

The appropriate variation in spousal support

[51]

After determining that there was a material
    change in circumstances, the trial judge was required to consider whether and
    to what extent a variation in the support obligation was required. As the
    Supreme Court cautioned in
L.M.P.
, once a
    material change in circumstances has been established, [a] court should limit
    itself to making the variation which is appropriate in light of the change. The
    task should not be approached as if it were an initial application for support
    under s. 15.2 of the
Divorce Act
 (at para. 50).
    The court was required to consider the changes in the light of the
    circumstances that prevailed at the time of the 2008 consent order.

[52]

Unfortunately the trial judge adopted the same
    approach as the trial judge on the first trial of the 2010 motion to change. He
    did not engage in any analysis of the circumstances at the time of the parties
    2008 settlement. Instead, the trial judge dealt with the matter as though he
    was determining spousal support for the first time. After concluding that there
    was a material change in circumstances for both parties, he imputed $40,000 per
    year to Ms. Pustai, and he ordered that spousal support be stepped down to
    $1,000 per month effective June 1, 2013 and terminated as of June 1, 2014. He
    offered no reason for the amount of reduced support and its termination other
    than that it was fair and reflects the economic reality of bothspouses.

[53]

Having concluded that there were errors in the
    trial judges order varying and terminating spousal support, this court may make
    the order that is appropriate, to the extent permitted by the record:
Cassidy
    v. McNeil
, 2010 ONCA, 218, 99 O.R. (3d) 81, at para. 39. Indeed,
    the parties asked that, if the appeal were successful, this court make an order
    based on the record, rather than sending the matter back to the trial court.
Before turning to this determination, I will address Ms. Pustais arguments
    concerning the trial judges order respecting the proceeds of sale of the matrimonial
    home. As I will explain, the parties dealings with the matrimonial home were
    consistent with their bargain, as reflected in their minutes of settlement, the
    secret trust agreement and consent order.

(2)

Matrimonial Home Proceeds

[54]

Ms. Pustai contends that the trial judge erred
    in ordering her to pay to Mr. Pustai one half of the net proceeds from the sale
    of the matrimonial home in 2010. I agree.

[55]

First, the trial judge, in considering the
    consent order, minutes of settlement and trust agreement, misapprehended the evidence
    as to how the parties sought to avoid the payment of Ms. Pustais legal and
    expert fees. It is the consent order and not the trust agreement that was
    intended to defeat the claim for legal fees. The consent order stated that Ms.
    Pustai was to transfer her one-half interest in the former matrimonial home as
    lump sum child support, while she had the right to remain in the home
    indefinitely and she assumed all costs associated with the home. However the
    trust agreement provided that Ms. Pustai would remain the full owner of the
    home and Mr. Pustai disclaimed all interest in the home. The 2008 consent order
    and the transfer of the home to Mr. Pustai were a matter of public record,
    while the trust agreement was kept secret.

[56]

The trial judges determination that the trust
    agreement was of no effect contradicts the finding of Pollak J. in
Pellman
    v. Pustai

at para. 13, that it was the assumption of all
    parties that Ms. Pustai would be awarded a significant equalization payment in
    the proceedings and that she would be able to pay her legal fees out of this
    amount. The evidence in that case included a telephone conversation Ms. Pustai
    had secretly recorded in which Mr. Pustai suggested a settlement without the
    involvement of their lawyers so that Ms. Pustai would not have to pay legal and
    accounting fees, and that she transfer the family home to him which he would
    hold in trust for her under a separate agreement which would remain secret in
    order to avoid paying the fees.

[57]

The notion that the proceeds of the home were
    consideration for s. 7 expenses is also contradicted by the fact that, at the
    time in question, Ms. Pustai had no income, and therefore effectively had no
    obligation to make any such contribution. Furthermore, in 2010 when the house
    was sold, on a signed direction from both parties, Ms. Pustai received all of
    the proceeds.

[58]

At the time of the settlement, TTMI had been
    valued on arbitration for the purpose of equalization at $1.1 million. Although
    Mr. Pustai contested this amount, the parties entered into their minutes of
    settlement and the consent order on the eve of the appeal of the arbitration,
    and the consent order specifically provided for the appeal to be dismissed. The
    sum of $125,000 (an amount that was stated to include equalization) was
    eventually paid. Ms. Pustais evidence was that she had compromised her claim
    for a larger lump sum equalization payment in relation to TTMI by agreeing to the
    full proceeds of the sale of the house  which ultimately amounted to $133,737
    in proceeds to her  as well as a higher level of indefinite spousal support. Payment
    of tax-deductible spousal support was more beneficial to Mr. Pustai than payment
    of an equalization payment with after-tax dollars.

[59]

While Mr. Pustai continued to contest this
    explanation of the parties true bargain at trial, I accept Ms. Pustais evidence
    as the only reasonable explanation in all the circumstances. Given the value
    that had been placed on TTMI prior to trial, and the clear wording of the trust
    agreement, it is not reasonable to accept Mr. Pustais assertion that he still
    expected to receive a portion of the proceeds of the sale of the house and/or
    payments for s. 7 expenses.

[60]

That is, all the evidence unequivocally points
    to the same conclusion: that the true bargain between the parties with respect
    to the matrimonial home was reflected in the secret trust agreement and not
    in the consent order of Lack J. There was no basis therefore for an order that
    effectively enforced a term of the consent order of Lack J. that the parties
    had no intention of complying with, because it did not reflect their actual
    bargain.

[61]

Accordingly, I would set aside the order
    requiring payment of one half of the net proceeds of the matrimonial home by Ms.
    Pustai to Mr. Pustai.

Determining the Order that Ought to Have Been
    Made

[62]

Based on the effect of the change in Ms.
    Pustais earning circumstances on the true bargain reached by the parties  one
    that combines both the terms of the consent order and the secret trust
    agreement  I would reduce, but not terminate, spousal support.

[63]

According to the evidence, at the time of the
    original bargain, Ms. Pustai was earning no income and had no expectation of
    earning future income. She would have been owed a sizeable equalization payment
    that included half of the value of Mr. Pustais interest in TTMI. Given all the
    circumstances, I accept Ms. Pustais explanation that, at the time of entering
    into the trust agreement and the consent order, the parties agreed that their
    net family property would be equalized by Ms. Pustai receiving the proceeds of
    the matrimonial home and Mr. Pustai retaining sole ownership of the most
    valuable asset: TTMI. In addition, Ms. Pustai would receive a $125,000 payment
    and would receive $3,000 per month in spousal support indefinitely based on the
    parties assumption that Mr. Pustai would continue to earn income of
    approximately $150,000 annually through TTMI.  All of this taken together,
    constituted the parties original bargain.  And it is this original bargain
    that the court must then vary appropriately based on its finding of material
    change in circumstances.

[64]

While the court has the authority to both vary
    and to terminate spousal support, in deciding what to do it is important to
    keep in mind the parties original intention. The parties agreed that there
    shall be no termination date for spousal support and that either party may
    ask for a review of the quantum of support upon a material change in
    circumstances. As this court confirmed in the 2014 Appeal, the parties agreed
    that only the quantum but not the duration of spousal support could be subject
    to variation, and Mr. Pustai is precluded from advancing any different
    interpretation (at paras. 17 and 18). The parties anticipated that a material change
    in circumstances might result in a variation in the amount of support. In my
    view, the change in Ms. Pustais financial circumstances justifies some
    adjustment in the amount of support to be paid, but not in the parties
    original agreement for ongoing support.

[65]

I have accepted the trial judges conclusion
    that Ms. Pustai now has income of her own and that this constitutes a material
    change in circumstances for the purpose of variation. As indicated above, the
    amounts of annual income that should be imputed to Ms. Pustai are $33,000 from
    2013 to 2018 and $38,000 commencing January 1, 2018.

[66]

The next step is to assess how to appropriately
    vary the parties agreement in light of this change. The Guidelines remain
    instructive in determining an appropriate variation of support:
Gray
    v. Gray,
2014 ONCA 659, at paras. 43 and 44, and
Schulstad
    v. Schulstad
, 2017 ONCA 95, at para. 52.

[67]

At the time of their settlement, Mr. Pustai had
    an imputed income of $155,800 annually and Ms. Pustai had no income. Based on
    these assumptions, at the time of the parties original bargain, for an 11.5-year
    marriage, the Spousal Support Guidelines would have indicated monthly support
    of $2,240 per month at the low end, $2,613 at the midpoint, and $2,986 at the
    high end for a period of 5.5 to 11 years. In essence, Ms. Pustais original
    bargain was for high-end support that did not terminate. She exchanged what
    might otherwise have been a higher equalization payment in return for high
    (rather than midpoint) support and support that would continue rather than
    likely terminate after 11 years. Understanding the parties bargain in this
    way, in light of imputing additional income to Ms. Pustai but concluding that
    all of the parties other circumstances, including Mr. Pustais income, remain
    materially unchanged,
[3]
I would adjust the parties original bargain only to the extent of imputing the
    additional income to Ms. Pustai and continuing to use the Guidelines as the
    point of reference.

[68]

In this way, imputing $33,000 to Ms. Pustai from
    June 1, 2013 to December 1, 2017 the Guidelines indicate a reduction in
    high-end support to $2,354 per month.  From January 1, 2018 forward, imputing
    her annual income as $38,000, Ms. Pustai will receive $2,258 per month.

[69]

In my view, this is the appropriate adjustment
    to spousal support starting from the parties original agreement and adjusting
    for the material change in circumstances that has been found. I would also
    order that on a go-forward basis, the parties are to make financial disclosure
    by exchanging their annual income tax returns and assessments.

The Trial Judges Delay

[70]

The trial judge released his reasons for
    decision some 27 months after the close of evidence in this case. In the months
    that followed there were some written submissions as well as inquiries by the
    judge about the location of various exhibits, and assurances that the reasons
    would be forthcoming. Ms. Pustai asserts that the only reasonable inference
    from the reasons, which are in some respects conclusory, and overlook certain
    evidence, is that the delay caused her substantive injustice.

[71]

It is unnecessary to address Ms. Pustais arguments
    on this point in any detail, as I would allow the appeal for the other reasons
    detailed above. In my view, no inference of any particular error can be drawn
    from the delay itself.

[72]

I will say, however, that the delay of 27 months
    was extraordinary, and inconsistent with what the parties were entitled to
    expect after a retrial of their family law dispute. And, contrary to Mr.
    Pustais assertion, the delay resulted in prejudice to Ms. Pustai who, after
    continuing to receive spousal support of $3,000 per month while the case was
    under reserve, was required to pay back support overpayments exceeding $80,000.
    As I have noted however, I would not rely on the trial judges delay in
    rendering his decision as a reason for allowing the appeal in this case.

Disposition

[73]

For these reasons I would allow the appeal and
    set aside the order of OConnell J. (except with respect to the term requiring
    Mr. Pustai to pay $33,500 to Ms. Pustai for the purchase of a vehicle). I would
    order that Mr. Pustai is to pay Ms. Pustai monthly spousal support of $2,350
    instead of $3,000, effective June 1, 2013 and $2,250 effective January 1, 2018. 
    Ms. Pustai will keep the proceeds of sale of the matrimonial home.  At trial,
    Mr. Pustai did not advance a claim for child support and adduced no evidence
    about s. 7 expenses. There was no evidence about the circumstances of the grown
    children to show that they continued to be children of the marriage within the
    meaning of the
Divorce Act
.  There is no basis
    to make an order for child support, and no child support or s. 7 expenses are
    owed to either party.

[74]

I would order costs of the appeal to be paid by Mr.
    Pustai to Ms. Pustai in the amount agreed between the parties, the sum of $15,000
    less the $4,000 previously ordered by Hourigan J.A., for a total of $11,000, inclusive
    of disbursements and HST. With respect to costs in the court below, if the
    parties are unable to agree, they may provide written submissions limited to
    five pages each, not including any costs outlines, as follows: Ms. Pustai
    within 20 days of these reasons, Mr. Pustai within 15 days of receipt of Ms.
    Pustais submissions, with reply submissions, if any, within ten days
    thereafter.

Released: September 27, 2018

K.
    van Rensburg J.A.

I
    agree.  Alexandra Hoy A.C.J.O.

I
    agree.  G. Pardu J.A.





[1]

Mr. Pustai also testified, and the trial judge accepted, that while
    his base employment income in 2007, the year before he settled the matrimonial
    dispute, was $120,000 + $6,541 (the latter number attributed for Mr. Pustais
    personal use of a company vehicle), that income number was grossed-up to
    $155,800 for the purpose of the consent order.



[2]
According to his income tax filings, i
n 2007 before the
    consent order was made, Mr. Pustais employment income was $126,541. In the
    years leading up to the variation trial (2010 to 2015) his employment income
    was essentially the same, although in 2013 and 2015 he had RRSP income.



[3]

As noted previously, Mr. Pustais base employment income
    remained steady throughout, although the number used in the consent order was
    $155,800. Given that everyone accepted that this was an imputed figure, and the
    onus on the party seeking a variation in a consent order to lead evidence as to
    why the income originally imputed should be changed, I see no reason to depart
    from the originally agreed upon amount of imputed income.


