SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: FS-10-23
DATE: 2012/07/06

RE: Lynne Theresa Wakeley, Applicant

AND:

Phillip Ross Wakeley, Wendy Wakeley and 1555937 Ontario Inc., Respondents

BEFORE: The Honourable Mr. Justice H. A. Arrell

COUNSEL:
Jerry J. Chaimovitz, for the Applicant
Andreus R. Snelius, for the Respondent, Phillip Ross Wakeley
Ann Stoner, for the Respondents, Wendy Wakeley and 1555937 Ontario Inc.

HEARD: July 3, 2012

ENDORSEMENT

Introduction:

[ 1 ] The applicant has brought this motion to have me attribute increased income to the respondent for the purposes of an increase in child and spousal support. As well I am to decide costs of a previous motion.

[ 2 ] The respondent argues this is a matter for trial as there is not sufficient information before me at this time to allow me to attribute any additional income to him.

Facts:

[ 3 ] The parties separated on June 22, 2000 after a 10 year marriage. They have three children who have been cared for by the applicant. The parties, as is evident from the size of this file, have been frequent users of our court system, at no doubt great expense to them both.

[ 4 ] The real issue appears to be what involvement and income the respondent has in various businesses owned by himself and his current wife, the co-respondent Wendy Wakeley.

[ 5 ] It appears clear that he is the sole shareholder of Lintec Print Solutions and 1215405 Ontario Inc., a holding company that owns the land and building where Lintec operates. He is a joint owner of 1498541 Ontario Inc., with his current wife. This company appears to own, rent and sell rental properties.

[ 6 ] The respondent’s current wife, whom he married on October 4, 2003, is the sole shareholder of Lintec Label Solutions as well as being a joint owner of 1498541 Ontario Inc. with the respondent.

[ 7 ] A trial was held in Ontario Court on June 23, 2005 and Edwards J. found the respondents income to be $60,000 per annum and reduced child support to $1,076.00 from the agreed to amount in a prior separation agreement of $1,881.00 per month based on income then of $120,000.00 per annum. The parties had also agreed to spousal support in the separation agreement of $2,119.00 per month. That was reduced by Edwards J. to $1.00 per month. That decision was not appealed by the applicant.

[ 8 ] In January 2010 the applicant brought the current application before the court regarding child and spousal support. She brought the current motion for interim relief in March 2012.

[ 9 ] The applicant earns approximately $35,000.00 per year as a supply teacher. She has been unable to secure a full time teaching position.

[ 10 ] The parties consented to an order on May 4, 2010 that income would be attributed to the respondent in the amount of $67,300.00 and child support of $1,318.00 per month being paid on an interim basis and without prejudice. Subsequent to that order a great deal of disclosure has been forthcoming from the respondent such that the applicant now believes income attributed to him of $67,300.00 is totally inadequate.

[ 11 ] The respondent started his printing business in 1994. He is clearly very experienced at it. His current wife started her company shortly after she married the respondent, and shortly before the trial conducted by Edwards J.

[ 12 ] Lintec Labels (Wendy’s co.) had gross sales of 1.95 million in 2009 and gross sales of 2.6 million in 2010 while at the same time Mr. Wakeley’s co. gross sales have been decreasing and in 2010 were $677,000.00.

[ 13 ] The respondent’s current wife, when she started this business, had no experience in this industry. There is no evidence from her before me advising when or how she acquired the experience to run this business, never mind the initial investment that may have been required. Indeed, and of significance, there is no evidence from the respondent’s current wife denying the allegations of the applicant that basically her company is run by the respondent and income from it should in part be attributed to him.

[ 14 ] It is also significant that the respondent and his current wife have signing authority for each other’s company; they each personally guarantee the debt of the other’s company. The companies operate out of the same premises; they have the same website, the same e-mail address, same mailing address, same contact information, same telephone number and same fax number. Indeed the website refers to both entities and the overall business as “Lintec Label and Print Solutions”, with the respondent as the contact person for both companies.

Analysis:

[ 15 ] The applicant argues that the respondent is purposely doing more business under his current wife’s company to divert income from himself.

[ 16 ] The respondent argues that that issue must be determined at trial and any interim order by me at this stage would be without foundation and prejudicial to the respondent and akin to a summary judgment. I disagree.

[ 17 ] Interim orders are made routinely by this court while parties await trial and the production of all the evidence. This is not a summary judgment type of motion as argued by counsel for the respondent as any order I make is totally without prejudice to whatever findings the trial judge makes after having had the advantage of hearing all of the evidence.

[ 18 ] The applicant urges me to attribute income of $207,000.00 to the respondent as being the combination of his line 150 income and the profit stated by his company and Wendy’s company. She earns separately from those amounts approximately $74,000.00 per annum. The respondent argues there is no justification for such an amount to be attributed and in any event a certain amount of funds must be kept in the companies to satisfy covenants to the bank on business lines of credit, and is therefore not available to him.

[ 19 ] The respondent is no longer in default to his bank on the covenants as he recently sold his home for 1.75 million using some of those funds for the bank and some for the purchase of a residence in Florida.

[ 20 ] It is clear that the respondent’s lifestyle is such that it could not happen on $67,000.00 per year. There is little doubt that some of the expenses of the respondent’s company would be considered soft. It is also too much of a coincidence to think that the astounding success of Wendy’s company and the lack thereof of the respondent’s company over the last few years has nothing to do with the current matrimonial litigation and everything to do with her business acumen.

[ 21 ] I conclude under all the circumstances that income will be attributed to the respondent in the amount of $120,000.00, the amount he agreed to in the separation agreement 8 years ago. I conclude that spousal support will be payable effective March 1, 2012, the date of commencement of this motion, on a without prejudice basis in the amount of $2000.00 per month. Child support will be payable effective March 1, 2012 for 3 children in the amount of $2135.00, again on a without prejudice basis to either party.

[ 22 ] Counsel advise that I need not deal with s.7 expenses.

[ 23 ] The final aspect of this motion is the setting of costs on the motion before me in June 2011 at which time the respondent concedes the applicant was substantially successful. The argument of that motion lasted the best part of a day. There was a reasonable amount of material that counsel had to prepare. It was somewhat complex in that it dealt with adding parties, further discloser based on lengthy affidavits by the applicants accountant, and a cross motion to strike the accountants affidavits as biased. The matter was vigorously defended, albeit unsuccessfully.

[ 24 ] The applicant seeks costs on a substantial indemnity basis. The respondent agrees to partial indemnity. There were no offers filed that would affect costs.

[ 25 ] I have considered the principles in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.) and find that costs to the applicant on a partial indemnity basis, in all the circumstances, is fair and reasonable to both sides and within their respective expectations.

[ 26 ] As noted by Armstrong J.A. in Boucher , supra, the fixing of costs involves more than merely a calculation using the hours docketed and the cost grid. He further stated in para. 24, “In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.”

[ 27 ] I conclude costs should be payable for this one day motion in the amount of $15,000.00 inclusive of taxes and disbursements except for the disbursement of Ms.Minelli, the applicants accountant.

[ 28 ] Ms. Minelli has submitted an account for her work exclusively for this motion for disclosure of approximately $55,000.00, an amount this court finds extraordinary for such a motion.

[ 29 ] The applicant argues most of the time spent by the accountant was as a result of the lack of co-operation of the respondent in refusing to be forthcoming with his corporate documentation. The respondent argues the requests were simply overkill and the time spent totally unjustified on the basis of proportionality. I agree.

[ 30 ] Ms. Minelli’s office appears to have spent great amounts of time reviewing documents by various people, she spent 5 hours coming to court to watch the motion, and a great amount of time would properly be considered preparation for her final report which has not yet been prepared. In all, she alone dockets 137 hours or 3.5 weeks exclusively to this file on a motion for disclosure.

[ 31 ] The applicant is entitled to be reimbursed now for reasonable work required by Ms. Minelli to allow her to be successful on the motion for disclosure; anything more is to be left to the trial judge after weighing the value of Ms. Minelli’s evidence and considering the outcome of the trial.

[ 32 ] Following the principles in Boucher , supra as to what is fair and reasonable to both sides and in the expectation of the losing party, and taking into consideration proportionality, I fix Ms. Minelli’s costs payable by the respondent at $15,000.00, without prejudice for the balance of her account being assessed by the trial judge.

[ 33 ] The respondent has 60 days to pay the cost order. He may pay off the extra support he owes from March 1 to date at $2,000.00 per month commencing July 1, 2012.

[ 34 ] The parties have agreed to a timetable to exchange experts reports and I have set November 5, 2012 for the settlement conference before me.

ARRELL J.

Date: July 6, 2012