ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: D1754-08
DATE: 2012/11/21

BETWEE N:

TRUDY LYNN OVERELL

M. Clarke, for the Applicant

Applicant

• and -

HAROLD SCOTT OVERELL

D. Godard, for the Respondent

Respondent

HEARD: October 29, 30, 31, 2012

The Hon. Mr. Justice Arrell

JUDGMENT

Introduction:

[ 1 ] The parties were married on September 7, 1985. They separated on August 13, 2008.

[ 2 ] The issues I have been asked to decide are the appropriate income for support purposes that should be attributed to the Respondent; the amount that he should have paid in spousal support to date, less what was actually paid; and any credits he should receive for educational expenses he has paid for the children. The parties also seek a divorce and a restraining order. They have agreed on equalization, a credit to the Respondent of $15,500.00 for payments on the Applicants line of credit, and a credit to the Applicant for child support for the first four months post separation.

Facts:

[ 3 ] Mr. and Mrs. Overell have 2 children. Chelsey is currently 22. She has completed a 4 year degree at the University of Guelph. She is presently enrolled in a 5 semester post graduate program at the Michener Institute in Toronto.

[ 4 ] Cody is 19 years of age and currently enrolled in his second year of a 4 year degree program in business at Guelph University.

[ 5 ] Mr. Overell has been employed for the past 25 years as a commercial real estate agent. He has been a part owner of Martel Real Estate Agency since well before the parties separated.

[ 6 ] Ms. Overell has not been employed for compensation since Cody was born. She remains unemployed. The parties have agreed that I should attribute $18,000.00 per year as income to her for support purposes since the date of separation.

[ 7 ] Mr. Overell’s sole source of income is commissions generated by commercial sales or leases through Martel where he is a one third owner. Those commissions earned by him are then transferred to Cheeco Investments which is his holding company of which he is the sole owner. Cheeco is the re-incarnation, as of Jan. 2009, of Cochee Investments, which he and the Applicant owned equally at the time of separation.

[ 8 ] All funds generated by Cheeco come from Martel.

[ 9 ] The Respondent has paid spousal support in the amount of $6,500.00 per month effective August 1, 2009 as per the order of Milanetti, J. dated August 20, 2009, based on income of $323,000.00 for 2009. All support payments are up to date.

[ 10 ] The children were initially with the Applicant upon separation. That changed within 4 months and by Christmas of 2008 were living with Mr. Overell, where they have remained.

[ 11 ] Cody is estranged from his mother. I accept that she has attempted to initiate contact but with no real success.

[ 12 ] Chelsey also does not appear to have a close relationship with her mother, however, I accept that that situation is improving. There was a period of more than a year of no communication, however, in the last year there has been some regular and meaningful contact between mother and daughter.

[ 13 ] At the time of separation Chelsey was just starting her first year at the University of Guelph. She worked that summer and every summer since at the Burlington Golf and Country Club. No direct evidence, such as tax returns, was produced to me as to her actual earnings. The only evidence I have as to her income is from her father who possesses her tax returns, but for some inexplicable reason did not produce them. Her mother has no information as to her income.

[ 14 ] The Respondent estimated Chelsey’s income as follows:

2008 $5000.00
scholarship $1,500.00
2009 $15,000.00
2010 $20,000.00
2011 $20,000.00
2012 $20,000.00

[ 15 ] I accept this testimony of the Respondent as the only evidence I have and although the earnings seem somewhat high he has seen her tax returns. Cody, according to his father, has only worked this past summer and his father estimates his income at $5,000.00. That is the only evidence before me.

[ 16 ] The Respondent has paid all the expenses for Chelsey at the University of Guelph. He has filed a university expense brief for her where he has attempted to document her expenses over her 4 year undergraduate program. The total is $54,000.00 which averages $13,500.00 per year.

[ 17 ] At the time of separation Cody was in grade 10 at a private school in Hamilton. He started in grade 7. He continued at this school after separation until he started Guelph University in September 2011. All expenses for Cody at private school and to date at Guelph have been paid by the Respondent. Cody has received no scholarships.

[ 18 ] The Respondent has received no child support from the Applicant.

[ 19 ] The Respondent filed a brief of expenses for Cody and claims to have spent $109,000.00 since separation on his private school and university education.

[ 20 ] The Applicant agreed private school was helpful to Cody and no submissions were made to me on her behalf that he should not have continued in private school after separation.

[ 21 ] The Respondent filed a report by Mr. MacCrae, an accountant. He opined in that report that the Respondent’s income for support purposes was as follows:

2008 $181,000
2009 $309,000
2010 $202,000

[ 22 ] He gave no opinion for 2011 or 2012. He was not called to give evidence. The Applicant did not dispute this evidence.

[ 23 ] The Applicant retained her own accountant, Mr. Carnegie, to do a report and give an opinion on Mr. Overell’s income for 2011 and 2012 for support purposes. His report is an exhibit and he gave evidence. He accepted the findings of Mr. MacCrae for years earlier. He basically followed the same methodology as Mr. MacCrae in calculating income for Mr. Overell. He concluded, for support purposes, that the Respondent’s income for 2011 was $317,000 and projected 2012 at $294,000. The unweighted average over the last four years he stated was $281,000.00 while he calculated a weighted average at approximately $284,000.00.

Position of the Parties:

[ 24 ] The Applicant urges me to accept the findings of Mr. Carnegie as to the Respondent’s income for 2011 and 2012 along with Mr. MacCrae’s calculations for 2009 and 2010. The Applicant was silent regarding income of 2008 and urged me to not use it in averaging the Respondents income, but instead use only the last 4 years as presented by her expert.

[ 25 ] The Applicant also wishes a restraining order based on several incidents that she testified about in the last year or so. The Respondent denies anything sinister and suggests they were mere chance encounters.

[ 26 ] Finally, the Applicant argues that the Respondent should be allowed no credit for S.7 expenses for the children’s education because the evidence, she submits, suggests the payment of those amounts were expensed through his holding company and therefore were used to reduce his income for support purposes. Significantly her expert did not address this issue.

[ 27 ] The Respondent argues that income from 2008 must be considered. He further suggests that I should use a hybrid approach as set out in some cases when considering increases in his income post separation. He suggests a 3 year average of 2008-2010 but could not seriously object to a four year average to 2011. He urges me not to consider 2012 because the year is not complete and the amount that will be ultimately earned is unknown.

[ 28 ] On the issue of a restraining order the Respondent urges me to simply make the mutual non-harassment paragraphs of the order of Pazartz J. dated April 28, 2009, permanent. He submits the several incidents related by the Applicant are grossly exaggerated by her and at no time did he ever intend in any way to harass her.

[ 29 ] Finally, the Respondent filed as Exhibit A in his submissions a list of expenses for Cody. He made no submissions regarding Chelsey, except for her first year, as she earned well in excess of what her expenses were that he has submitted. He does feel these education expenses for the children should be credited to him because, although these expenses initially were paid through his company, like all his personal expenses and as they were prior to separation, his accountant at year end attributes those expenses to him personally. He testified that these expenses are paid with after tax dollars. I accept his evidence on this issue as neither of the experts indicated anything untoward was occurring and there is no evidence Revenue Canada has found any problems on this issue.

Analysis:

[29] The evidence before me from the Respondent as to his income in the last two years is non-existent. He elected not to update the report of his expert Mr. MacCrae past 2010, even though his report is dated September 17, 2012. He did not call Mr. MacCrae because he testified he could not afford it. He also did not call his bookkeeper or anyone to assist the court as to his income. He was unable to answer questions about his current income other than to repeat he had no business, “the pot was empty”, and that he was earning little money at present. I reject his evidence in that regard.

[ 30 ] The Respondent stated he only had 15 listings at present. However, on line listings were put to him that showed at present he had well over double that amount. He claims those listings are for a number of units in one building. That may be but they are all a separate listing for sale or lease with a separate commission on each payable to him.

[ 31 ] I also note that two profit and loss statements for Cheeco Holdings were filed with the court for 2012. The first shows commissions paid to the Respondent between January 1, 2012 and September 6, 2012 amounted to $150,094.00. A second entitled Cheeco Holdings profit and loss January through August 2012 shows commission income of $181,471.00. Mr. Overell had no plausible explanation for this discrepancy other than possibly one included HST and one did not. No tax returns for the Respondent were filed on this trial.

[ 32 ] I conclude, as did Milanetti, J. in Murray v. Murray [2010] ONSC 4278, that I should draw an adverse inference against the Respondent on the issue of his income. I accept the evidence of Mr. Carnegie that the Respondent had income of $317,324.00 for 2011. However, the evidence before me is less than satisfactory for 2012 and I am unable to conclude what the Respondents actual income for this year will be.

[ 33 ] I reject the averaging done by Mr. Carnegie as he failed to consider the year of separation. I also reject his theory of weighting the more recent years as that is giving greater effect to years of income more disconnected from the marriage.

[ 34 ] I accept the argument that the Respondent’s income fluctuates somewhat given the nature of his business and an average is the most appropriate method to determine a fair assessment of his income going forward for both parties. The average, however, must include the year of separation and should not include the current year until those numbers are finalized.

[ 35 ] I therefore, find the Respondent’s income to be as follows:

2008 $181,000.00
2009 309,000.00
2010 202,000.00
2011 317,000.00
2012 unknown

[ 36 ] I therefore conclude his average unweighted income since the date of separation up to and including 2011 to be rounded out at $252,000.00 per year. I conclude this is the amount I should use for 2012 and going forward until such time as one of the parties seeks a variance as a result of a material change.

[ 37 ] The parties agree that I should attribute $18,000.00 per annum to the Applicant for the purposes of deciding spousal support.

[ 38 ] The Applicant agrees that she implicitly consented to the s.7 expenses for Cody to continue at private school after separation. Although no submissions were made by the Applicant that her estrangement from her son should relieve her of contributing to his education I have considered that issue and the case law. I give little weight to that argument based on the cases and the facts of this case. The Applicant never gave up in her efforts to have a relationship with Cody and certainly never suggested she did not agree with him completing his secondary education at private school. Under the circumstances she has an obligation to contribute to that education and the post secondary education of her children. The Respondent is entitled to a credit, in after tax dollars, of the amounts he has paid for this couples children’s education since separation.

[ 39 ] I note Cody had earnings of $5,000.00 last summer and I conclude he should have contributed $2,000.00 to his second year university expenses leaving the amount payable by his parents for 2012 at $6,708.00.

[ 40 ] I conclude with regard to Chelsey, based on the expenses the Respondent submits he made for her attendance at university and the income he testified that she earned, that only in first year would her parents be required to assist her. I note her expenses for first year, as submitted by the respondent, to be $11,173.00. She had earnings of $5,000.00 plus a scholarship of $1,500.00. I conclude she should have contributed $2,000.00 to her first year of university plus the scholarship leaving $7,673.00 for her parents to fund. I further conclude that I have no evidence on her post graduate education expenses and certainly the Respondent has not paid any such expenses based on his evidence. I therefore make no finding on whether any contribution should be made by her parents for this further education.

[ 41 ] The Respondent, in submissions, reduced the amount of s.7 expenses for Cody and Chelsey he is claiming as follows:

2008 (fall) Cody $433.00
Chelsey $7673.00
2009 (private school) (Cody) $25,000.00
2010 (private school) (Cody) $30,970.00
2011 (private school (Cody)
& university) $20,220.00
2012 (university) ($8708.00-$2000.00) (Cody) $ 6,708.00
Total $ 91,004.00

[ 42 ] I have concluded that the mid range of the Spousal Support Guidelines should be used for spousal support. No persuasive evidence has been put to me as to why I should deviate from that range. The Respondent argued that I should not go as far back as the date of separation regarding support as per S. (D.B.) v. G. (S.R.), [2006] 2 S.C.R. 23 . I reject that argument as the Respondent wants certain credits from the date of separation. He is not entitled to pick and choose different dates for different calculations that are solely to his advantage.

[ 43 ] I therefore conclude that the following amount of spousal support should have been paid by the Respondent to the Applicant, after taking into account the amount earned by both parties for each of those years and the amount paid by the Respondent in education expenses for the children:

2008 $4000.00 x 4= $16,000.00
2009 $6300.00 x 12= $75,600.00
2010 $3200.00 x 12= $38,400.00
2011 $8000.00 x 12= $96,000.00
2012 $6800.00 x 11= $74,800.00
Total $ 300,800.00

[46] The respondent has paid (44 months x $6500.00) = $286,000.00 in spousal support. I accept the evidence of the Applicant that he has paid in addition $21,054.00 for the months following separation up to the implementation of Milanetti J.’s order. Her evidence is more reliable and accurate than the Respondents on this issue. I conclude he should have paid child support based on $181,000.00 in income for 2008 in the amount of $9,406.00. I conclude the Applicant, based on her imputed income of $18,000.00 per annum should have paid child support in 2009 in the amount of $2,244.00, 2010 in the amount of $2,244.00, 2011 in the amount of $1,104.00, and in 2012 the amount of $1,012.00 for a total to date of $6,604.00.

[47] The parties agree that the Respondent is entitled to a credit for payments to the line of credit he has made since the date of separation. I am advised by counsel that that amount is $15,500.00.

Conclusion:

[48] The Respondent should have paid:

a) Child support $ 9,406.00

b) Spousal support $ 300,800.00

TOTAL $ 310,206.00

The Respondent is owed the following credits:

a) Child support owed to him $6,604.00

b) Line of credit paid $15,500.00

c) Payments made following separation $21,054.00

d) Spousal support paid $286,000.00

TOTAL $329,158.00

The Applicant therefore owes the Respondent $329,158.00 - $310,206.00 = $18,952.00

[49] The Respondent will pay spousal support in the amount of $7,200.00 per month commencing December 1, 2012 and thereafter each month, such amount does not take into account any ongoing education expenses of the children. The Applicant will pay child support averaged over 12 months, for the summer, in the amount of $92.00 per month commencing December 1, 2012 and continuing so long as the children qualify for support.

[50] The educational expenses of the children will be negotiated by the parties on a go forward basis after the total earnings of the children are known at the completion of each year. The children will be expected to contribute $2000.00 out of the first $5000.00 earned and $3000.00 out of the next $5000.00 earned and 90% of any additional earnings plus any grants or scholarships awarded. The parties will contribute proportionate to their income to expenses not covered by the children’s earnings, after all invoices and receipts for the expenses have been exchanged.

[51] The parties are divorced as of this date.

[52] The paragraphs in the order of Pazaratz J. dated April 28, 2009 dealing with mutual non harassment will continue until further order of this court.

[53] An order will issue based on the consents executed by the parties.

[54] The parties will exchange personal and corporate tax returns, with attachments, on or before June 1 of each year and notices of assessment within 10 days of receipt.

[54] If the parties are unable to agree on costs they may submit written submissions to me within 15 days of the release of this judgment of no more than 3 pages in length, double spaced, in addition to any draft bill of costs and any relevant offers.

ARRELL, J.

Released: November 21, 2012

COURT FILE NO.: D1754-08

DATE: 2012/11/21

ONTARIO SUPERIOR COURT OF JUSTICE BETWEE N: TRUDY LYNN OVERELL Applicant - and - HAROLD SCOTT OEVERELL Respondent REASONS FOR JUDGMENT ARRELL, J.

Released: November 21, 2012