COURT FILE NO.: 441/02 & 453/02

DATE: 20021213

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

THEN, ELLEN MACDONALD, AND CZUTRIN JJ.

B E T W E E N:

TRUDY JEAN WAMSLEY

Michael S. O’Neill, for the Plaintiff

Plaintiff

• and -

ROBERT MICHAEL MOORE and MIKE MOORE & SONS CONSTRUCTION LTD.

Albert D. Ferranti, for the Defendants

Defendants

HEARD: October 8, 2002

BY THE COURT:

[1] These appeals from the interim orders of Stortini J. of February 13, 2002 and May 21, 2002 raise issues of entitlement to and quantum of interim spousal support in the face of a final release contained in a Separation Agreement and the termination of employment pursuant to an Employment Agreement executed a the same time as the Separation Agreement.

[2] The parties married on May 11, 1974. They separated in July 1995 and divorced in September 2000. The former wife is the Plaintiff/Respondent in these appeals (“the wife”). The former husband is the Defendant/ Appellant, Robert Michael Moore (“the husband”). He is the sole shareholder of the Defendant/Appellant, Mike Moore & Sons Construction Ltd.

[3] Lang J. granted leave to appeal on July 10, 2002. In his appeal, the husband asks that the orders be set aside and in their place, this court make an order dismissing the wife's motion for interim spousal support with costs on a substantial indemnity basis. Alternatively, it is suggested that this court award spousal support to the wife in the amount of $1.00 per month.

[4] The grounds of the appeal are set out in the husband’s Notice of Appeal, dated July 17, 2002. We repeat them:

The learned Justice failed to apply the 2-stage inquiry for spousal support " in the face of a final release contained in a Separation Agreement as set out in Miglin v. Miglin (2001), 2001 8525 (ON CA), 53 O.R. (3rd) 641 (Miglin) and the Supreme Court of Canada cases which led to it and the Superior Court decisions which have applied it;

the learned Justice failed to properly apply the said 2-stage test;

the learned Justice misapprehended the facts on the motion;

the learned Justice erred in that he applied the test of a triable issue on the issue of entitlement to spousal support;

the learned Justice failed to deem income to the Plaintiff for employment income not earned and for investment income on savings not disclosed;

the learned justice applied the wrong principles tot he issue of quantum of interim spousal support.

[5] In her notice of Appeal dated July 24, 2002, the wife requests that this court vacate the second order of Stortini J. and substitute in its place, an order for interim spousal support of $800 weekly. The wife also asks for full "health and medical" benefits and for the provision of a company car of equal or greater value to the one she previously had in her possession prior to her termination on November 29, 2001.

[6] These appeals raise issues similar to those raised in Miglin. The parties signed a Separation Agreement on May 19, 2000. Solicitors advised each party. The Separation Agreement provided for the equalization of the parties' assets, a waiver of spousal support, and a contract of employment for the wife with the husband's company. In the context of the agreement[^1], it is important that we record the following facts. At the time of the marriage, the wife was 15. After the marriage, she did not continue her education and, therefore, has a level of education equivalent to grade 8. For the first 15 years of the marriage, the wife did not work outside the matrimonial home. She raised the couple's two children. In 1989, the wife commenced employment with the corporate defendant (the business). She did clerical and bookkeeping work from 1989 onward. The wife's employment at the business permitted the parties to split income from the business, which was a flourishing one.

[7] After separation in July 1995, the wife continued to be so employed on a full time basis until the corporate defendant terminated her on November 24, 2001. It is alleged that the termination was for cause citing misperformance and breaches of the confidentiality provisions of the Employment Agreement, signed by the parties at the time they signed their Separation Agreement. In her statement of claim, dated December 20, 2001, the wife seeks spousal support from the husband. She also seeks damages for wrongful dismissal from the corporate defendant.

[8] In January 2000, the parties began the negotiations for the terms of their Separation Agreement, which concluded in May 2000. As in Miglin,[^2] there was an agreement, collateral to their Separation Agreement. In this case, it was the Employment Agreement that contained in paragraph 4 (1), the following provisions:

4. RENUMERATION AND BENEFITS

In consideration of the Employee's performance of the obligations contained in this agreement, the Employer will:

(1) Pay the Employee a salary of $41,600.00 per annum, payable in bi-weekly installments of $800.00 and subject to the deductions as accord with customary practice. Vacation pay shall be fixed at 10% of gross wages paid to the Employee;

(2) allow the Employee to have the use of a Company cellular telephone for Company and personal use, at the Employer's expense;

(3) provide the Employee with a leased motor vehicle. All leasing costs and costs for repairs, maintenance, insurance and fuel shall be borne by the Employer. The Employee agrees to maintain fuel costs at reasonable levels. The Employee shall have the option to purchase the leased vehicle at expiration of any such lease for the same price offered to the Employer by the leasing Company;

(4) maintain the Employee, at the Employer's expense, on the Employer's benefit plan and group RSP plan.

7. TERMINATION

(1) Subject to (2), (3) and (4) of this paragraph, employment pursuant to this agreement will terminate 5 years from the date of execution hereof unless renewed by the Employer prior to that date.

(2) The Employee is not entitled to any notice of the termination of this agreement or salary in lieu of notice where the Employee's employment is terminated for any breach of this agreement or any other cause deemed sufficient in law or in any other circumstances in which no notice of salary in lieu thereof is required by law.

(3) Subject to (4) of this paragraph, employment pursuant to this agreement may be terminated by the Employer at any time without cause upon the Employee being given 30 days advanced notice of termination or by being paid salary in lieu of such notice.

(4) In the event that the Employee elects to tender her voluntary resignation the Employer will require no less than 30 days advance notice in writing which the Employer may waive, in whole or in part. Should the Employee resign her employment she is not entitled to any payment from the Employer.

[9] It is obvious to us that there is an error in the drafting of paragraph 4 of the Employment Agreement. An annual salary of $41,600 would, if paid weekly, mean that the weekly salary payments would be $800. It is difficult for us to conceive of circumstances where this inadvertence in drafting escaped the notice of the parties and their solicitors. One of the consequences of the error is that Stortini J. in paragraph [14] of his reasons dated February 13, 2002 ordered interim support "in terms of Paragraph 4(1) of the Employment Contract". He also ordered that the husband continue health coverage, as ordered by Pardu J. on January 10, 2002. Because of the ambiguity in the order of Stortini J., the Local Registrar refused to enter it even though it was approved by counsel for the husband. The matter came back to Stortini J. on May 15, 2002. On May 21, 2002 he released further reasons. In paragraph [2], he stated:

Paragraph 4(1) of the Employment Contract specified “a salary of $41,600.00 per annum, payable in bi-weekly installments of $800.00…” Clearly, the word "bi-weekly" was an error. It should have read "weekly". Because of this patent ambiguity the Local Registrar declined to enter the order. Hence this clarification hearing. ( Emphasis in original)

[10] Stortini J. then conducted an analysis of the wife's needs taking into account that she began receiving on February 3, 2002 unemployment insurance benefits of $354 net weekly. He then fixed her monthly support at $400 per month starting in March 2000 and continuing at that rate until the unemployment benefits ceased at which time, the monthly payments were fixed at $800 per month.

[11] We are mindful of the standard of review that governs these appeals. It is with respect to questions of law, one of correctness. With respect to questions of fact, the motions court judge's findings must stand unless there is palpable and overriding error. See Loprieno v. 839891 Ontario Inc. [2002] O.J. No. 2588 wherein Cavarzan J. refers to Housen v. Nikolaisen, [2002] S.C.C. 33, a decision released on March 28, 2002.

[12] On issues which are both matters of law and of fact, we have concluded that the decision of Stortini J. cannot stand. The palpable error is most obvious in the following analysis. In the May 21, 2002 reasons, he reasoned that the wife's needs would be different when she was in receipt of unemployment insurance benefits. He seems to have found that that her monthly needs were met by the benefits of $1522 monthly plus a further payment of monthly support of $400. This suggests that he concluded that her interim needs were $1922 per month. But when her unemployment insurance payments ceased, he fixed her support at $800 per month. On this basis alone, the decision must be set aside. Even if Stortini J. had it in his mind that she would have income from capital, such income could not get near addressing her reasonable interim needs. There was no evidence that she would have employment income. The evidence was to the contrary. She had embarked on a program of skills retraining and, at least, in the interim, the evidence was that she would not have employment income.

[13] Further, it is implicit from the Employment Agreement that it was agreed that the wife's needs would be addressed by the payment of $ 41,600 annually together with the other benefits contemplated therein.

[14] Mr. Ferranti stressed that this case was different from Miglin. He urged us to focus on the fact that the Separation Agreement contained a spousal release clause that provided that no change in circumstance, even if drastic, would entitle the wife to claim spousal support. He saw this as a legal barricade to this court awarding interim spousal support. Referring to help wanted ads for bookkeepers from local newspapers, Mr. Ferranti submitted that the wife can obtain employment elsewhere.[^3] We strongly disagree. In this case, we are satisfied that the wife survives the two staged inquiry mandated in Miglin. We are satisfied that the wife has demonstrated a material change in her circumstances. She was terminated unilaterally from her employment contract. Whether or not such termination was justifiable will be a matter for the trial judge.

[15] We see the Employment Contract as an implicit recognition to entitlement to support but we would add that without it, it is highly improbable that the wife would not be entitled to interim, if not long term, support. Indeed, it is unlikely that there would have been a spousal release clause in the Separation Agreement.[^4] As the Employment Contract was the spousal support provision, the wife is entitled to interim support based on the parties own determination of need and ability to pay as contained in the Employment Contract.

[16] We find that the husband has an undisputed ability to pay. The wife has experienced economic disadvantage by reason of the marriage. We find that the Separation Agreement does not reflect the principles and objectives of section 15.2 of the Divorce Act, 1985, S.C. 1986, c.4. [now R.S.C., 1985, c.3.( 2ndSupp.)].

The Quantum of Support

[17] Having determined that the wife is entitled to support, we shall fix the amount of interim support. We considered section 15.2 of the Divorce Act, the two orders of Stortini J., his reasons, and the evidence that was before him as contained in the Appeal Book.

[18] The husband has derived his livelihood for some 25 years from the defendant corporation. We proceed on the basis that he is able to pay reasonable spousal support.

[19] The first order of Stortini J. fixed support at $41,600.00 per annum, payable in bi-weekly installments of $800.00. Because of the ambiguity in the wording of his earlier reasons, the parties sought the clarification of the quantum of support. At that time, Stortini J. engaged in a review of the wife's expenses in order to determine her need. As will be seen from paragraphs [9] and [11] of these reasons, we are unable to reconcile his calculations nor can we understand the basis upon which he deducted certain expenses.

[20] The evidence discloses that the wife has been accepted for further education. The evidence also disclosed that her unemployment insurance benefits will come to an end very shortly. Having lost the income from the Employment Contract, which we find was in its essence support, the wife has lost employment benefits including the use of and all related expenses for the operation of her motor vehicle. The evidence contained in the record does not permit us to engage in a detailed examination of income tax consequences of support paid to the wife. Having considered her financial statement, we do not agree with all of the deductions made by Stortini J. For example, the wife now has car-related expenses. Yet, Stortini J. deducted these expenses from her budget.

[21] We calculate that at a minimum the wife has expenses, net of income tax, of approximately $3,000 per month without considering legal fees, school expenses, and her entire household repair expense as set out in her financial statement.

[22] The trial judge will be in a position to analyze the financial circumstances of both the husband and the wife. The trial judge will be obligated to consider, following section 15.2 of the Divorce Act, all of the factors set out therein including the possibility of a retroactive readjustment of this interim order.

[23] In the result, we order that commencing January 1, 2002 [^5] the husband shall pay to the wife weekly interim spousal support of $800. The Employment Contract included other benefits including the use and expense coverage of an automobile. We understand that the wife has replaced the vehicle that was taken from her at the time of termination. She now has expenses related to its operation and maintenance. She will also have income tax payments because of this order. With these matters in mind, we do not make any adjustment of the $800 weekly amount for the period that the wife was or is receiving unemployment insurance benefits. As a result any adjustments to quantum will be left for the trial judge. In addition to these amounts, the husband is to maintain all health insurance as ordered Pardu J. on January 10, 2002.

[24] It will be obvious from these reasons that the husband will be required to make an adjusting payment to cover the amounts owing to the wife as a result of our findings. Such adjusting payment is to made within 15 days from the release of these reasons. This adjusting payment will be made in a lump sum but will be treated, as between the wife and the husband, as interim periodic payments of spousal support. We add one further comment. We do not ignore that the wife has some capital. She has been paid her equalization payment. Its status, from an income tax perspective, is unclear because there is evidence that the husband attempted to deduct this payment as if it were a support payment. She has used at least a portion of her payment to replace the automobile that she was entitled to in the Employment Agreement. She has tuition fees and lawyers fees. Even without knowing the actual amount of her remaining capital, we conclude that she is entitled to interim support as fixed above.

[25] The wife will have her costs of this appeal. The parties may make written submissions to the panel on costs within fifteen days from the release of these reasons. Because we intend to fix costs, the parties should submit detailed Bills of Costs.

THEN J.

E. MACDONALD J.

CZUTRIN J.

Released:

COURT FILE NO.: 441/02 & 453/02

DATE: 20021213

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

THEN, ELLEN MACDONALD, AND CZUTRIN JJ.

BETWEEN:

TRUDY JEAN WAMSLEY

Plaintiff

• and –

ROBERT MICHAEL MOORE and MIKE MOORE & SONS CONSTRUCTION LTD.

Defendants

REASONS FOR DECISION

[^1]: This could be described as the "factual matrix' of the agreement, a term which has been discussed in several decisions of the Ontario Court of Appeal. See, for example, Kentucky Fried Chicken v. Scott's Food Service Inc. (1998), 1998 4427 (ON CA), 41 B.L.R. (2nd) 42 wherein Goudge J.A. refers to Reardon Smith Line Ltd. v. Yngvar hansen-Tangen, [1976] 1 W.W.R. 989 at 995-996.

[^2]: In Miglin, the agreement was a five-year consulting contract that could be renewed "from time to time" by mutual consent.

[^3]: We found it ironical that, on the one hand, the husband suggests that the wife is employable as a bookkeeper, and on the other hand the evidence is that the husband and his second wife tracked her alleged incompetence as a bookkeeper in order to justify dismissing her for cause.

[^4]: The wife, in her affidavit, deposed that had she known that her employment was short term, she would have insisted on spousal support.

[^5]: There is evidence that the wife was paid "in lieu of notice" for the month of December 2001. See Exhibit E to the affidavit of the wife sworn on December 20,2001.