COURT FILE NO.: FS-12-375167
DATE: 20121227
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY LAW
BETWEEN:
CHRISTINE McCAIN,
Applicant
– and –
MICHAEL McCAIN,
Respondent
Harold Niman and Daryl Gelgoot, Co-Counsel for the Applicant
Gerald Sadvari and Stephen Grant, Co-Counsel for the Respondent and
Debra Newell, Counsel for the Respondent
HEARD: NOVEMBER 18, 2012
ENDORSEMENT: GREER J.:
[1] The Applicant, Christine McCain (“the Wife”) brings a Motion seeking the following interim/temporary relief from the Court in her Application against the Respondent, Michael McCain (“the Husband”):
(a) An Order that he produce the preliminary information and documentation requested in Linda Brent’s Preliminary Information Request dated March 13, 2012;
(b) An Order that he pay temporary spousal support to her in the sum of $200,000 per month retroactive to July 1, 2011;
(c) In the alternative, if she is not awarded retroactive spousal support, to pay to her the sum of $550,000 for interim disbursements and interim costs;
(d) A temporary Order that he name her as the irrevocable beneficiary on his life insurance policies;
(e) A temporary Order that he maintain her on his extended health, medical and dental plan;
(f) A temporary Order that he pay child support pursuant to the Guidelines to her for two of the parties’ children, namely Hannah, born […], 1992 and James, born […], 1991.
Some background information
[2] The parties were married on August 15, 1981 and separated on June 30, 2011 after 30 years of marriage. The parties have five (5) children, only two of whom remain as dependants and children of the marriage for child support purposes. Jonathan age 26, Lauren age 24, and Hilary age 22, while not totally self-sufficient financially, do not live with their Mother and are not considered children of the marriage for purposes of child support. There is an issue as to whether James (called “Scott”) now 21 years of age and Hannah, now 19 years of age qualify as children of the marriage for child support purposes.
[3] The Wife has not worked outside the home for the past 26 years, as she raised the parties’ five children. The parties had a happy marriage and a busy life raising their children. They were socially active as a couple and the Husband is a very experienced and financially astute businessman. The Wife says that over the course of her marriage she was never involved in family discussions about finances. In their marriage, the Wife says she deferred to her Husband on all financial issues, if and when raised.
[4] After sixteen (16) years of marriage, the Wife was faced with a momentous decision, a burden she in no way could ever have imagined having placed upon her in the parties’ then long-term marriage. The Husband’s father, Wallace McCain, was a well-known, extremely wealthy businessman involved in many aspects of the food business. He may have been in the process of thinking about succession planning or thinking about how he wanted his business to be run when he retired or died.
[5] Wallace McCain in 1996 announced to his children that he required all of them children to enter into marriage/domestic contracts with their then spouses, to protect assets he would pass on to his children either in his lifetime or on his death.
[6] Wallace McCain therefore told his son, the Husband, that he and his Wife must enter into a marriage or domestic contract, or he would be disinherited. The Wife says she was told that if she did not the contract, the parties’ lifestyle as a family would greatly suffer. The Wife was told that she would not be able to make a claim against certain business assets. If the contract were not entered into by the Husband and his Wife, the Husband would be left nothing from his estate.
[7] The family moved wherever it was necessary to accommodate the Husband’s career. When the parties first married, they lived in New Brunswick, where the Husband worked in the family business. In 1986, when the Husband was promoted to McCain Foods USA, they moved to Illinois, where they raised their family. In 1995, when the Husband was terminated by that company, they moved to Toronto, where he became the CEO of Maple Leaf Foods. During all these busy years, the Wife was the primary parent to the children even though she did have some help in the home.
[8] The Husband, who had worked with his father in the business, must have realized that unless he and his Wife entered into such a contract, he would not inherit any part of the business from his father. Whatever the background was to what was taking place at this time, the Husband presented the Wife with The Marriage Contract (“the Contract”) to be signed by them. It was signed by him on April 21, 1997.
[9] The details of the Contract and the background relating to its execution, will be discussed and analyzed later in this Endorsement. The Wife says that she had little, if any, personal information about her Husband’s financial and business affairs, at the time she signed it. She says she had no way of knowing what she was giving up by entering into the Contract. She, therefore, seeks to have the Contract set aside.
[10] The Husband is presently President and CEO and owner of Maple Leaf Foods Inc., a family business established by his late father, Wallace McCain. The terms of the Contract worked, and the Husband was not disinherited. The Husband has been hugely successful in his business ventures and is now said to be worth about $500,000,000.
[11] At the time the parties separated, they occupied a large matrimonial home, which they bought in July of 1995. Under the Contract, the sole ownership of that home was transferred into the Wife’s name on August 8, 1997. She continues to reside in the home. The Husband, after separation, moved into his own premises.
[12] During the marriage the parties occupied three cottage properties in the Georgian Bay area. The Husband has since purchased another cottage solely in his name, but two of the earlier three cottages are in the name of the Wife.
The Contract
[13] While the Contract is dated April 21, 1997, it was not signed by the Wife until May 28, 1997. She says she was a stay-at-home mother and her Husband was a “savvy businessman” who took advantage of her vulnerability in ensuring that she would accept what was offered and do what was asked of her. The Contract was drafted by the Husband’s family law lawyer, Stephen Smart. It was presented to her by the McCain family lawyer, Jack Pelch, who arranged for her to meet with a family law lawyer. She chose to see Judith Nicoll, to receive advice.
[14] The Wife summarizes how she sees the terms of the Contract. She says she waived any entitlement to an equalization of family property at separation, that she waived her entitlement to spousal support. On the second anniversary of having signed the Contract, the Wife was to receive a payment of $300,000. In the event of marriage breakdown after January 1, 1998, she was to receive a maximum payment of $7,000,000 within 12 months of that event. Finally, upon execution of the Contract, the title of the matrimonial home was to be transferred into her name.
[15] Under the Contract, the Wife waived all her property rights on marriage breakdown, keeping only assets registered solely in her name. She waived any equalization claim she had under the Family Law Act. She further agreed that if there was no marriage breakdown in the parties’ relationship and if her Husband predeceased her, he agreed to maintain a Will which would give her at least the benefits she would receive under the Contact on separation. Also, in para. 4(3) of the Contract, the Husband “…agrees he will obtain a guarantee from McCain Capital Corporation in the form of Schedule 1”, and deliver it to her contemporaneously with the execution and delivery of the Contract.
[16] The Husband even ensured that in the event the parties did not separate, that if his Wife predeceased him, the ownership of the matrimonial home would pass to him, as would the household contents. In paragraph 9 of the Contract the parties release all claims by either of them against each other’s estate and under S.5 of the FLA, and paragraph 10 is a partial waiver of the right to elect entitlement under the FLA.
[17] Paragraph 6 of the Contract makes Michael “…responsible to financially provide fully for the children’s needs.”
[18] Paragraph 14 contains specific releases by the Wife releasing the Husband from all claims for any interest in, or for any sum calculated on the value of his interest in any property and the income from any property now existing or arising in the future, inclusion but not limited to his current investment portfolio, his share of McCain Foods Group Inc., his interest in the estates of his parents Wallace and Margaret McCain, and his interests in three named Trusts.
[19] The Guarantee is attached to the Contract. The financial disclosure is set out at the end of it, in two parts. The first is a page of generally described assets with interests in trusts, his ownership of shares of McCain Foods Group Inc., and possible future testamentary interests from his parents. The second is a Schedule of the Husband’s personal assets at September 17, 1996, nearly a year before the Contract was signed. It describes assets and values, less liabilities, and shows a net worth of $3,216,673.76. The interest in Trusts is shown as zero, with a note to say that he is a “contingent beneficiary” of each of three separate named trusts. None of the Trust Deeds were provided to the Wife. There is an outline of these Trusts with estimated values as at December 31, 1995 and an outline of who are the contingent beneficiaries.
The Wife’s Position
[20] The Wife says that she has been left in an extremely difficult position both emotionally and financially, given that the Husband’s position is that the Contract stands and she is only entitled to the benefits under the Contract. She says these provisions are unconscionable and do not comply with the overall objectives of the Divorce Act. She says the financial disclosure was not adequate in the attachments to the Contract, She says that she was unable to determine what it was that she was giving up by entering into the Contract. She says her Husband took advantage of her vulnerability and she entered into the Contract under duress.
[21] The Wife points to how her Husband has denuded the value of the only assets she is left under the Contract. On December 5, 2007, the Husband registered a mortgage against the matrimonial home in the amount of $4,770,000. The Wife is the registered owner of the home, yet did not directly receive any of those monies. The Husband is shown as the spouse. The document does not say what the monthly payments are but the interest rate is 5% over the bank’s prime rate. The Wife is shown as the borrower.
[22] The Wife says the same thing happened with the cottage properties. There are two of them, in which the Wife has an interest. On February 1, 2008, the Husband also mortgaged 2 of those totalling about $2,500,000. Both of those cottages are registered solely in the Wife’s name. She did not receive any of these funds either. As for the fourth cottage recently built, the Wife says it is worth about $3,000,000 and she oversaw all the work on it.
[23] While the Wife says she was kept in the dark about the parties’ finances, she had unlimited access to funds and money was never an issue in their marriage. She says:
, “…we lived a privileged lifestyle commensurate with Michael’s substantial income. We spent whatever Michael earned and wanted for nothing. When I needed money for personal or family expenses, I either asked Michael directly or contacted his assistant, who arranged to have the funds transferred to my bank account. Michael also paid my credit card bills. Michael never raised any concerns about my spending habits during the marriage, nor did he review my expenses. Similarly, he did not limit his own spending.
[24] The Wife sets out in some detail in her Affidavit sworn April 9, 2012, the luxurious standard of living she was used to during the parties’ marriage. There were memberships in 3 private clubs, private schools for all their five children, extravagant entertaining both personally and through business with the very best foods and wines available. She says some events cost as much as $200,000. She did all the shopping for and organizing of events, dealt with the caterers, chose the menus and guest lists and hired staff.
[25] The parties own six (6) boats, with five (5) stored at the main cottage area and one sailboat with four (4) staterooms. That sailboat was built in Finland at a cost of $8,000,000 says the Wife and she was responsible for the interior design and outfitting of it. There was a crew of three (3) that operated the sailboat. She believes the maintenance cost of that boat alone was about $400,000 annually. The Husband has just recently commissioned the construction of a new 100 foot boat at an estimated cost of $18,000,000.
[26] The parties were in the middle of renovating the matrimonial home at an estimated cost of $800,000, when they separated. The Wife is now left with incomplete renovations to deal with and no money to do so, she says. She also says that the parties generously supported a number of charities each year for which she is still committed to help.
[27] One of the examples of the parties’ lifestyle between November 2010 and June 2011, is the lavish vacations, whether for business or personal vacations, they went on, included flying to The Grenadines, Jamaica, California, the British Virgin Islands, Halifax, Barcelona, Mustique, New York City, Tampa and Fredericton.
[28] The Wife says that she has been effectively cut off from all financial resources and has had to resort to using her capital to survive on. She lives in the house but the Husband stopped paying expenses but continues to meet the mortgage payments. She is faced with a garden and lawn maintenance bill for 3 months of $28,767.62. On August 22, 2011, the Husband wrote to her and told her that until:
…we agree on that responsible budget, you should make NO COMMITMENTS on travel, home, investments, projects or advance stocking up etc.”
He says that without a budget, he is not just going to send cash to her.
[29] When the parties first separated, the Husband began paying monthly money to the Wife around November 2011. At one point he thought $9,460 per month tax free was appropriate. As of April, 2012, when she swore her Affidavit, the Wife said she was now being provided with $29,334 per month. She says, however, that her most current monthly expenses are about $118,803.05, as set out in her most recent Financial Statement.
[30] The Wife says that her Husband has continued his controlling behaviour after separation, as he did while they were married. He organized the family’s lives, she says, and bullied her. He was angry when she told him she wanted a separation and then tried to turn the children against her. She is extremely upset and hurt that her Husband has been portraying her as having mental issues, suggesting that she is bi-polar and cannot manage money in a responsible fashion after all these years of marriage and family life together.
Spousal Support Guidelines
[31] The Spousal Support Advisory Guidelines (“Guidelines”) were not in place when the Contract was signed. The Wife had no concept of what income, in the future, she would be entitled to if the parties’ separated. If there had been no domestic contract signed by the parties, the Wife would have been entitled to spousal support as set by the Guidelines.
[32] Under the current DIVORCEmate calculations for spousal support, where the children are all adults, and where the Wife has income of $120,000 per year and the Husband has income of $9,700,000, for a marriage of 29 years, and the Wife 53 years of age, the range is as follows:
(a) Low $299,375 per month
(b) Mid $349,271 per month
(c) High $398,986 per month
[33] While the Guidelines’ formula stops at an income of $350,000, there is no glass ceiling or hard cap on the amount of support which can be ordered in high income cases. The percentage increase over that may be simply applied and the amount as noted above, is determined. The Court examines the payee’s budget and assets and other income before coming to an amount for support.
[34] It is the Wife’s position that while she could ask for the mid-range of $349,271 per month, she is simply asking for $200,000 per month before tax is applied, to meet her budgetary needs on an interim basis.
[35] While the Guidelines are advisory only, as noted in Fisher v. Fisher, 2008 ONCA 11 (C.A.), the Courts, since then, have found them to be a very important and significant tool in examining the family’s whole financial picture including the number of children living with the payee spouse, and what deductions applied to the payor’s income.
The Husband’s position
[36] The Husband’s position is that the Contract contains a complete release and it cannot be ignored. In his Affidavit sworn by him on April 25, 2012, he begins with his concern and dismay at his Wife’s Affidavit, what she has to say in her financial statements and what he believes are her health issues. He says that she has been diagnosed by several medical and psychological professionals with bipolar/hypomania and refuses to get treatment. He sees her behaviour as being consistent with this diagnosis, where he says she has racing thoughts, excessive energy levels, out-of-control spending, paranoia, irrationality for which she will seek no treatment. He says she cannot control her spending or manage her finances. He sees her statements in her Affidavit as being misleading and incorrect.
[37] The Husband does concede that the Wife is highly intelligent, capable and independent. He says she is compassionate, focused on their family, possessing the highest integrity and never motivated by materialistic dreams or wealth. He says she was “…never comfortable with the excessive spending of a luxurious lifestyle, even those elements (private jets and yacht), which we maintained for business and community leadership roles.”
[38] The Husband says that when they were married, he and his Wife worked together to craft a set of family values, which they jointly taught their children. He says they had family meetings to discuss education, inform and guide our children together consistent with their values.
[39] With respect to their children, the Husband says that the eldest three are all successfully employed, with only the younger two remaining as children of the marriage. He says that these two, namely Scott, who is a third-year biology student and looking towards medicine or scientific research, and Hannah, a second-year business student, are emotionally independent, and have only spent a few nights per month and maybe 30 days in the summer with their mother since September 2011. He says he takes care of all their financial needs, so that child support is not an issue.
[40] The Husband says that the Wife’s perceptions about her having to sign the domestic contract under duress are wrong. He does not accept that the Contract was unfair, and that he did not make proper financial disclosure. He further says that his father, Wallace McCain:
…made no secret of his unshakeable desire to pass on his wealth through generations of his bloodline, not fragmented by marital breakups. He wanted it passed intact to his children, his grandchildren and through future generations. Chris knew this very well, and clearly and openly supported this principle within our family.
Wallace, says the Husband, treated all his children equally and asked each of them to do the same to protect and ensure that his wishes for his wealth were upheld. He says that his father:
…made it clear to everyone, including Chris and me, that if a contract of this kind were not in place, he would structure his estate planning and trusts to ensure that the wealth would skip a generation from us to our children.
[41] The Husband says that he and his Wife discussed the terms of the Contract on many occasions, since he wanted her to feel comfortable with it. He thinks that the financial disclosure attached to the Contract is sufficient disclosure. He says he was sure if his father was true to his word, that he, himself, was confident that he would (in the future) have the means to pay the $5,000,000 offered in the first draft of the Contract, in the event of his marriage breakdown. He says the values as stated, did not change very much over the year or so before the Contract was actually signed by them. The $5,000,000 figure, however, was changed to $7,000,000 before the Contract was signed to take into account cost-of-living adjustments.
[42] The Husband does not accept that the Wife’s expenses come even close to the $118,000 she is asking in the way of spousal support. He believes that the Wife can sustain herself in the matrimonial home with a monthly amount of $36,500, now up from the original amount given to her of $9,500 or so monthly, and later upped it to $29,334 per month since November, 2011. The Husband says this is “net of tax”. In addition, the Husband says he continues to pay $24,383 per month on the mortgages he placed on the properties in her name and carries the cottage expenses.
[43] The Husband acknowledges that he mortgaged the matrimonial home in the Wife’s name, constructed a new cottage at a cost of $3,590,000, renovated the home at a cost of $855,000 and purchased a guest cottage and renovated it at a cost $2,320,000. He says the only way they could finance all of this was to mortgage the matrimonial home and one of the cottage properties. He also acknowledges that 2 of the 4 cottage properties are in the Wife’s name.
[44] He says that the Wife’s assets, including the matrimonial home and the cottage properties, plus her other investments should be worth about $15,000.000-$17,000,000, far more than was contemplated under the Contract. He says she should sell the matrimonial home and get a small home. He says his father never intended his wealth to go outside the “family bloodline”.
[45] The Husband says that parties ought to be free to negotiate with finality a deal that suits both their needs. It is the parties that decide what is fair, not the Court. The Contract, he says, must be looked at in its totality.
The parties’ Incomes and Assets
[46] The parties filed their most recent Financial Statements in early 2012. The Wife’s is dated January 12, 2012, which was filed with her Application of the same date. At that point in time, the Wife has no values for the real properties she owns, nor does she give any values for household goods and personal effects. She shows her investments as being worth approximately $795,000. Her debts, including the 3 mortgages on the matrimonial home and the cottages, total $7,352,450.32. She was unsure, at that date, what income her investments produced but showed that the Husband was paying her $29,334 per month. She shows her total monthly expenses as $215,985.63.
[47] The Husband’s Financial Statement is sworn February 17, 2012. He shows his monthly income as $257,667, with an annual income of $3,092,004. His monthly expenses are shown as $720,000, which total $8,640,000. Without including any value for his interest in Maple Leaf Foods Inc. pension plan, the Husband says his assets are worth $24,645,187.
[48] Since filing that Statement, the Husband has now produced copies of his recent Income Tax Returns, which show the following as his annual income:
(a) 2011 - Line 150 - $9,664,215.67
(b) 2010 - $6,274,155
(c) 2009 - $5,199,817
(d) 2008 - $5,691,717
The Wife’s expert valuator, Linda Brent, has prepared preliminary calculations on what she says is the income which should be attributed to the Husband for those years and projected in 2012. I have not taken those figures into account since firstly, it was opposed by the Husband, given its preliminary nature. He has not responded to it yet. Secondly, the Motion before me is an interim/temporary Motion and not a Trial. If the matter goes to Trial the final income reports of both sides will be dealt with by the Trial Judge.
[49] The Husband says that most of his income comes from Maple Leaf Foods Inc., in which he owns both stock and options. He had been receiving an annual capital payment of approximately $870,000 from McCain Capital Corporation, but 6 months after the parties’ separation, that company ended “…with a long planned restructuring on December 2, 2011, so it is no longer available to me to defray the shortfall.”
[50] The Husband says in his position as CEO of Maple Leaf Foods Inc., he is restricted in selling stock and exercising options in that company, presumably since he is an “insider”. He has outlined in his April 25, 2012 Affidavit, other reasons that in 2012, his income will go down, as less cash flow will be received from his two main sources of income. What the Husband left out about the restructuring of the company, says the Wife, is that he acquired a 32.69% interest in the company, so his asset base has increased.
[51] The Wife also says that what is not reflected on her Husband’s income tax return is that the company was paying him an annual dividend of approximately $7,000,000, which goes into his company, McCain Capital Inc. The Husband says that while his interest in 1235795 Ontario Inc. (which consists mainly of indirect interests in Maple Leaf Foods Inc. and McCain Foods Group Inc.) is valued at approximately $468 million at the valuation date, but is not included in his net family property as it is excluded by virtue of the terms of the Contract.
[52] The Husband also points to the fact that he is following the terms of the Contract by paying to the Wife the lump sum amount stipulated in the Contract. He says he paid her the sum of $6,472,800 on April 25, 2012. He also says that since the Wife refuses to sign any document so that he can claim his monthly payments as spousal support to her, he has annualized his payment of $9,646 per month (at first) over 36 years (presumably based on some insurance table), which would amount to $2,546,337. He also says that when one takes into account all the payments he makes monthly on her behalf, it totals $100,000.
[53] The Husband takes the position that the Wife does not really know what she wants or needs by way of income, except that her investments are only producing an annualized income of 2% per year. He therefore says that the Court has no basis on which it can make any Order. He says that the Wife has simply manufactured “a grab-bag of grounds” on which to challenge the Contract. He says that from the time the Contract was signed, until the date of the separation, the Wife never complained about the terms of the Contract nor mentioned it.
[54] The Husband points to the fact that, when examined under oath, the Wife says that at the time the Contract was signed, she did not consider it unfair, that she feels in no way threatened by him, that she considers him a fair person and that she still loves him, that the value of the Trusts did not matter to her. He does, however, acknowledge that his Wife felt the duress put on her (and indirectly, I suppose on him) of what her father-in-law Wallace said would happen if she did not sign the Contract.
Analysis
(a) The Parties’ perceptions
[55] The parties are both dealing with experts or business valuators to assess what the Husband’s true net worth is and what his income projection is. There also can be no analysis, at this point in time, of what income, discretionary or otherwise, the Husband is entitled to receive from the various McCain Family Trusts, so that cannot be taken into account on this interim/temporary Motion.
[56] What is known about the Husband’s assets is that his approximate net worth at the time of separation was $500,000,000. That value may have increased in the interim between separation and now since the value of the Husband’s interest in Maple Leaf Foods Inc. has increased with the share value having increased in the interim.
[57] The parties’ separation took place after nearly 30 years of marriage. The Contract was signed in 1997, about the mid-point in their marriage. Even at that point, the parties’ marriage would have been considered a “long-term” marriage, where the Wife never worked after the 5 children were born, and spent her time raising them and looking after the household, moving with the family when it was required, and lavishly entertained both personally and for business purposes.
[58] The parties’ lifestyle leading up to the date of separation, was lavish by anyone’s standard. It appears that money was no object when it came to buying cottages, so that the family would be left with enough property and cottages so all would be comfortable now and in the future.
[59] The Husband, however, seems to gloss over the fact that 2 of the cottage properties are actually owned by her. Further, since the Wife does not want to sell the matrimonial home, she is still faced with unfinished renovations to pay for. The Wife does not think that all the cash that the Husband stripped out of these properties prior to their separation was applied for the various renovations undertaken. While the Wife is mortgagee on title to all these mortgages, the Husband must be the guarantor, as he is keeping up the payments.
[60] The Husband did commission the building of a new yacht at a price of $18,000,000. While there is no direct evidence on this point, at separation, the sum of about $1,800,000 had been paid as a down payment to the builder. The Wife thinks it came from the mortgages and in a recent update, the Husband says that the amount paid down is now over $3,000,000. The last payment of $1,200,000 was made while the Husband was paying his Wife uncategorized monthly payments in amounts between $9,460 to $29,500, and in the year in which he earned over $9,600,000 income.
(b) The payment under the Contract
[61] The Wife says that the payment to her, which the Husband says was $6,750,000 was not really paid to her, but was, as the Husband knows, going to be paid to a professional third party money manager, given what the Husband says was her “excessive spending patterns” and her inability to “effectively manage a significant amount of money.” The Wife says this is a repudiation of the Contract and that the Contract should no longer apply.
[62] The Wife acknowledges that she eventually took the cheque, on a without prejudice basis, and placed it in an interest-bearing account with the TD Bank. She says she is receiving advice from its private banking people. She acknowledges that it is now producing approximately $10,000 per year of interest on the investments, on which she will have to pay income tax.
[63] The Husband, in his examination, acknowledges that he has not been paying his Wife sufficient monies to meet her expenses and maintain a certain lifestyle. While he has offered to increase it to $36,000 or so per month, that figure in no way comes close to what her estimated expenses are.
(c) The Contract itself
[64] The Contract was signed by the parties at the insistence of the Husband’s father, Wallace McCain after 15 years of marriage. Both parties agree that if the Contract had not been signed, the father would have disinherited the Husband. Most marriage contracts are signed just prior to the marriage. Some are one-issue contracts, if signed during marriage, to exclude an inherited family cottage or other specific assets. This was not the case before me.
[65] The real question which should be asked is, “How could the Wife have possibly refused to sign under those circumstances?” Although the Wife received legal advice about the Contract, there were negotiations, which took the lump sum payment up from $5,000,000, the originally suggested figure, to $7,000,000. Even then, the Contract was wholly inadequate in that the Wife could not possibly know what her situation would be in the future without spousal support. The parties had a very happy marriage with 5 children. No one anticipated that a separation might take place in the future, even though the Contract was clearly made to fit that circumstance.
[66] How could the Wife possibly take on the burden of not signing the Contact for her own personal gain, knowing that her Husband’s father would cut her Husband out of receiving his inheritance? As it was, a number of months passed before she did sign it and one major change was made to it.
[67] One of the purposes of the Contract was to prevent either from claiming spousal support at either their separation or on the death of the first of them to die. See: para. 2(2)(b)(iii). The Contract provided that the Wife would have the matrimonial home transferred into her name and that the lump sum would provide her with capital, in the event of either separation or death.
[68] Para. 15 of the Contract includes a release of support by each upon separation and on death of either of them. It also says that neither will have a right to support on the first of either event takes place. Reference is made to the release of all rights under the FLA and the Divorce Act and the Succession Law Reform Act.
[69] Both parties refer to the Supreme Court’s decision in Miglin v.Miglin, 2003 SCC 2, [2003] S.C.J. No. 2. The Court, in para. 84, says the Husband, must not view spousal support arrangements in a vacuum, but must look at the agreement in its totality. He further says that the principle set out in para. 91, that the parties must take responsibility for the Contract the executed must be considered. The Wife points to the fact that in para.77 of Miglin, supra, the Court says that an agreement is only one factor among others that the Court must look at in determining spousal support.
[70] In Miglin, supra, the Court sets out the two-stage test to be used to determine whether a court will uphold an agreement that limits or waives a party’s support rights. Firstly, one must look at the circumstances in which the agreement was negotiated, and see whether it should be discounted in those circumstances. It also looks to see whether there was pressure on the signor or whether one of the parties was more vulnerable. At the second stage, the Court must assess, at separation, whether the agreement still reflects the original intention of the parties and the extent to which it is still in substantial compliance with the objectives of the Divorce Act.
[71] It is the Husband’s position that the Miglin test is best applied after a full hearing. He says that Courts have acknowledged that there are serious difficulties faced in trying to apply the test in interim circumstances. See: Palmer v. Palmer, [2003] S.J. No. 671 (Q.B.). In the case at bar, however, there are volumes of evidence in the form of Affidavits, Financial Statements, clear income figures for the Husband for the past 4 years, and complete budget requirements of the Wife. I have before me, all the evidence required to come to a determination on interim/temporary spousal support.
[72] The Husband also refers to Hall v. Sabri, [2011] O.J. No. 4178 (S.C.J.), where the parties had entered into a separation agreement waiving support. In that case, the Applicant then came back to ask for interim spousal support. The Court noted that the approach should be one of great caution where granting interim relief would contradict or nullify a contract signed by the parties. In the case at bar, I have set out why I have nullified the waiver of spousal support in the parties’ Contract. I have not nullified the whole Contract, and have noted the severability clause in the Contract. If the Wife intends to challenge the balance of the Contract, that is an issue for another day.
[73] The Husband says that the Wife understood and without hesitation agreed to the plan set out in the Contract. He says she knew it would be a “life-changing” event for her. He also knew, however, that he did not have the assets to back-up the money on the table, so to speak, because his father had to guarantee the payment, if it had to be made.
[74] The Husband says there was no duress placed on the Wife in signing it. In my view, the duress was subtle and psychological, in that she appeared to be the key to the Husband remaining as one of his father’s heirs. Of course the Husband did not say “you must sign this contract or I will divorce you,” but that was the underlying stake in it all.
[75] Paragraph 22 of the Contract states that all parts of it are severable from all other parts. Therefore, the issue of spousal support can be severed from the rest of the Contract on an interim/temporary Motion such as the one before me. As noted in Spence v. Sly, 2010 ONSC 6060, [2010] O.J. No. 4721 (S.C.J.) at para. 1, on a Motion for interim support, the Court “Will not conduct an in-depth analysis of standing or entitlement.” It says that the moving party on the Motion need only make out a “reasonable case for standing and entitlement”, after which the Court will proceed to assess the parties’ means and needs.
[76] On the evidence before me and as set out in this Endorsement, the Wife never worked during the last 25 years of the parties’ 30 year marriage. She managed the household, raised the 5 children, entertained socially and for business, assisted with the décor of the various properties they owned and in the décor for the new yacht. The Husband agrees that his Wife was very supportive of his working hard to build up the business.
[77] While the Wife has some assets of her own, as noted, they are insufficient to produce enough income for her to live on, let alone meet even half-way, a lifestyle that partly mirrors the lifestyle they had together. In my view, it would not be practical or useful to even consider the proposition that the Wife might enter the workforce, for which she has no training or skills.
[78] The Supreme Court in Moge v. Moge, [1992] 2 S.C.R. 813 in paragraphs 83 and 84, sets out how the Court can recognize how spouses contributed to the family’s financial betterment by taking on domestic and financial responsibilities. It says, “they are factors that should be considered in granting spousal support.” It also says that the doctrine of spousal support focuses equitable sharing, where a marriage should be regarded as a joint endeavour.
[79] In Kerr v. Baranow, 2011 SCC 10, [2011] S.C.J. No. 10 at para. 207, the Court says that in deciding the suitability of a “retroactive” award of spousal support, the Court must look at “…the needs of the recipient, the conduct of the payor, the reason for the delay in seeking support and any hardship the retroactive award may occasion of the payor spouses. In the case at bar, all these factors favour the Wife receiving retroactive support.
[80] In Turk v. Turk, 2008 CanLII 3420 (ON SC), [2008] O.J. No. 397 (S.C.J.), Madam Justice Backhouse sets out in para.60, that for interim spousal support, the Divorce Act requires that a Judge consider all the factors listed under s. 15.2(4) of that Act, as well as the objectives under S.15. 2(6), case law supports the proposition that the parties’ respective means and needs should assume the greatest significance and that the other objectives and factors be taken into account only in so far as practicable.
[81] There is no question that the Husband has more than sufficient income to meet all of the Wife’s needs. His income does fluctuate from year to year but it is too early in the litigation to determine if the companies in which he holds interests, will be able to manipulate his income. See: Lakhani v. Lakhani, 2003 CanLII 2161 (ON SC), [2003] O.J. No. 4041 (S.C.J.) at para. 15.
[82] The parties’ marriage is a long-term marriage, where each spouse should be able to continue to live in a fashion that, while not equal, does not require the Wife, in this instance, to have to immediately sell her matrimonial home or one or more of the cottages in her name. She should not have to use up the capital she has in her name to support the expenses of her continuing to live in the matrimonial home. See: Elgner v. Elgner, 2009 CanLII 68827 (ON SC), [2009] O.J. No. 5269 (S.C.J.) at paras. 33 and 34.
[83] The Husband was examined about a Draft Amending Agreement that the parties negotiated but never finalized. He refused to reveal what instructions were given to the person who managed the parties’ affairs. It apparently arose out of concerns the Wife had about the Contract. The Draft was made sometime in 2008 so it is clear that the Wife, despite what the Husband says, knew the Contract was unfair. It would have given the Wife the sum of $7,000,000 immediately on separation and a life-time income of $1,500,000 per year, to be included as income in her hands and deductible by the Husband for income tax purposes. It also included a yearly review clause. There was to be no financial disclosure attached since both parties were aware of each other’s assets and liabilities.
[84] The Wife says that the financial disclosure provided by her Husband at the time the Contract was signed was “inadequate and essentially meaningless.” The Summary of Net Worth is dated 8 months before the Contract was signed. There are not a lot of details about assets and liabilities of the Husband when he presented the Contract to his Wife. The information provided about the various McCain family trusts was not fleshed out in the attachments to the Contract.
[85] There is no information as to whether the Wife was ever given copies of the Trust Deeds, themselves. As was said by Madam Justice Mesbur in Dubin v. Dubin, 2003 CanLII 2103 (ON SC), [2003] O.J. No. 547 (S.C.J.) at para. 32, “A party needs to know what asset base might potentially grow, in order to determine what he or she is being asked to give up in the agreement.” She knew that the parties did not have the money to fund the lump sum in the Contract. She knew that Wallace McCain was guaranteeing that but how could she know what she might be entitled to in the way of spousal support.
[86] The Husband also seems to say that the Wife has no need for spousal support because she has assets worth $15,000,000-$17,000,000. I take it he is looking at the value of her real estate holdings, which she does not intend to sell. I cannot tell whether it takes into account the mortgages the Husband arranged to place on the title to all of her properties. On the other hand, it is the Husband who wants to keep all cottage properties as a family compound. There is no offer to buy out the Wife’s interest in the three cottages. She therefore does not have liquidity to earn income and provide support for herself.
[87] Was the bargain acceptable? In my view, it was not acceptable in a long-term marriage, which went on for another 15 years after the Contract was signed. There were no projections of what the Husband would be earning in the future. There were no projections about lifestyle changes, which took place as the years went on. When the marriage did break down, the Husband’s net worth was approximately $500,000,000, while the Wife was left with about $5,000,000 in liquid assets plus 3 properties, all of which had been mortgaged a few years earlier. Even if the Wife invested all the money she had, she would not have received more than 2% in banker’s acceptance or short-term GIC’s, which would produce income of about $10,000 monthly. That income would cover the property taxes, insurance and some utilities, with nothing left over for even the basic necessities of life.
[88] It is the Wife’s position that the objectives of a spousal support Order under the Divorce Act, have not been met under the Contract. Even the Husband, in his examination, agreed that the Contract was not fair to his Wife. It is clear on the face of the Contract that it is unfair, improvident and unconscionable in the circumstances of this case, to the Wife. See: Mundinger v. Mundinger, 1968 CanLII 250 (ON CA), [1969] 1 O.R. 606-611 (C.A.). An agreement, which may have appeared as fair to the Husband when it was signed, can through time become unconscionable. In my view, this is what has happened, and this leaves the Wife with very little. The circumstances regarding its execution, the improvident result for the Wife and the extent of the Husband’s now wealth, are sufficient to have the spousal support provisions of the Contract set aside.
(d) The Wife’s health
[89] The Husband has been very upfront about what he says are his Wife’s health issues. He openly tried to say that she was not capable of managing money and wanted to control the management of the lump sum payment he eventually paid to her. He surreptitiously had mental health professions who attended one of the parties’ social events, observe the Wife and give him an opinion about her mental health. Neither of the two there ever examined the Wife, so whatever opinion was given could not qualify as evidence in Court.
[90] The Wife was then forced to seek a medical opinion to say that she was not bipolar/hypomania, as the Husband had said he had medical advice that she was. The Wife underwent a full psychiatric assessment with Dr. Graham Glancy, professor of Psychiatry at the University of Toronto. His report, with respect to the Wife, states, “It is my conclusion that there is no evidence to diagnose hypomania, mania or bipolar disorder.”
[91] In addition, the Wife sought affidavit evidence from personal friends and persons with whom she worked when parties and functions were held by her and her Husband. While her Husband may feel she is a spendthrift, she is not the one who pushed the cottage compound property purchases and the purchase of the $18,000,000 yacht. The Wife says she can manage money and can hire financial consultants to help her, if necessary.
[92] In my view, this type of evidence has nothing to do with the Wife’s right to proper spousal support. It must have been very hurtful for her to have to defend her mental health in this matrimonial litigation.
(e) The Wife’s Budget and expenses
[93] Without taking the mortgage on the matrimonial home into account, the Wife’s budget, as set out in her first Financial Statement she filed with her Application, include the general upkeep of the home and the gardens at about $6,000 per month, upkeep of the pool of $1,250 monthly, property taxes of $4,092.23 per month, utilities of $4,220, security $1,782 monthly.. The continuing home renovations, the Wife says are $59,175.25 per month. Her automobile expenses including lease payments, taxis, gas are $3,489 monthly. Basic household expenses including food, pet care, dry cleaning, meals outside the home total $12,812 monthly and home and car insurance $1,229.58. The Pilates/yoga instructor is $2,600 monthly and Granite Club fees and expenses are $1,500 monthly.
[94] The Wife filed an up-dated Financial Statement sworn on November 1, 2012, in which some of the original figures have been changed. She now has income of $19,646 per month from her interest on the lump sum and the payment to her by her Husband of $9,646 per month. This gives her an estimated income of $235,752 per year. Her budget is now down to $118,803.05 per month. This, it must be remembered, is to be paid out of her after-tax income. Her yearly expenses are estimated at $1,425,636.
[95] In this new Statement, the only figures which have changed are the house property taxes, which has increased by $300 per month, with meals outside the home reduced to $10,478.91 and the Pilates/yoga Instructor down by $500 per month.
[96] The Wife also has discretionary items in her budget. These include clothing for children at $1,250 monthly, travel now down to $16,395 monthly, clothing now down to $13,000, charities up to $7768 monthly, gifts $4,200, Verity Women’s club $1,500 monthly, entertainment $5,562 monthly, and hair care at $650 per month.
[97] I am unclear what is meant by “décor” but it has now been reduced to $8,000 per month. I assume it has to do with redecoration of the matrimonial home renovations. “Art” now reduced to $5,833 is included, when the house must surely have some art on the walls already. It may be that these last two items are under contracts already signed and entered into prior to the parties’ separation.
[98] In my view, the cost of “household supplies” at $400 per month should be covered in the food budget, which is generous. Further, having the cost of 2 clubs in the budget, may be somewhat generous. Surely, “Art”, which is very discretionary item, can be left out of an interim/temporary Order.
[99] It is difficult to analyze how much of each or all of the discretionary amounts should be added to the Wife’s household budget. There is sufficient information in the materials before me to show that the children, who still remain dependent, have some income of their own and that the Husband has undertaken to support them. The Wife’s budget food budget covers any expenses she may incur while these children stay with her when they are in the city. I therefore dismiss the Wife’s claim for interim child support.
[100] Taking the balance of the items into account as discretionary items, it seems to me that an amount for interim/temporary spousal support of $175,000 per month is appropriate in the circumstances of this case. I have taken into account that the Wife’s own assets produce some income, as noted above. I order the Husband to pay the sum of $175,000 per month on an interim basis as spousal support. The amount shall be taxable in the hands of the Wife, and deductible for income tax purposes by the Husband. Given that the tax rate is approximately 50% on an income of that amount, the Wife’s net income would be about $87,500 per month.
[101] An Order shall go that the Husband pay to the Wife interim/temporary spousal support in the amount of $175,000 per month, taxable in her hands, commencing January 1, 2013 and each month thereafter on the first of every month until further Order of this Court. The Husband shall provide the Wife with post-dated cheques for at least 6 months, or the parties may make whatever banking arrangements they agree to in writing to have inter-bank transfers.
[102] Further, the Husband shall continue to make the mortgage payments on all mortgages which are registered against the 2 cottages in the Wife’s name, as well as on the matrimonial home, which is also in her name. The monies borrowed against the matrimonial home and the cottages were done at the behest of the Husband. I have not taken into account the cottage expenses, as I am unclear as to its usage by whom or what arrangements have been made in this regard.
(f) Retroactive Spousal Support
[103] The Wife has asked that the spousal support be made retroactive to the parties’ date of separation. Since they separated on June 30, 2011, such support shall be retroactive from July, 2011 to December 2012 in the amount of $2,800,000. The Husband shall be given credit for all amounts he has paid to the Wife during that interim period, and the balance remaining to be paid shall be paid by him quarterly payments until fully paid. The parties shall refile their Income Tax Returns accordingly.
[104] The Wife has been using her capital to support herself in the interval between separation and this Order. Our Courts have held that retroactive support may be ordered on an interim basis. See: Desrochers v. Tait, 2008 CanLII 70040 (ON SC), [2008] O.J. No. 5419 (S.C.J.) at para 31 and Turk, supra, at para. 65. The Husband has always had the ability to pay the support I have ordered. He knew that the Wife wished to remain living in her home. He was aware of the cost of the upkeep of their home. He gave her the luxurious lifestyle they had during their latter years of marriage and should not be seen to take it away from her, making her use her capital to continue to live comfortably.
[105] The Husband knew that the Wife would claim spousal support when they separated because that fact was clear in the Draft Amending Agreement that was drafted in 2008 but not signed. In MacKinnon v. MacKinnon, 2005 CanLII 13191 (ON CA), [2005] O.J. No. 1552 (C.A.), the Court granted prospective support from the date the Application was issued. While the Wife, in this case did not file her Application until January 2012, I have given her retroactive support to the date of separation since she had no real income of her own.
(g) Life Insurance, Health, Medical and Dental Plans
[106] The Husband shall, within 30 days of this Order, name the Wife an irrevocable beneficiary of any life insurance policies he has in his name, until further Order of this Court. While the youngest two children may be partially dependent on their father for support, they are contingent beneficiaries of family trusts and presumably under their father’s Will. He therefore must keep the Wife as a beneficiary under his policies, since she is his only dependent.
[107] The Husband shall also keep the Wife covered under his health, medical and dental plans until further Order of this Court.
Conclusions
[108] The following Orders shall issue:
All sections and paragraphs of the parties’ Contract dated April 21, 1997 and signed May 28, 1997 by the Wife respecting spousal support, are hereby severed from the balance of the Contract and are set aside for the reasons as outlined herein.
The Husband shall pay interim/temporary spousal support to the Wife of $175,000 per month commencing January 1, 2013 until further Order of this Court.
The Husband shall pay the Wife retroactive spousal support of $175,000 per month less amounts paid on account from July 1, 2011 to December 1, 2012, in quarterly instalments from the date hereof until paid in full.
The Wife’s claims for interim child support is hereby dismissed.
The Husband shall keep the Wife covered under his life insurance presently in place, and name her as an irrevocable beneficiary until further Order of this Court.
The Husband shall continue to keep the Wife covered under his health, medical and dental plans.
The Wife’s claim for a payment for interim disbursements by the Husband is dismissed, as she is receiving retroactive spousal support.
The parties shall continue to make full financial disclosure and the parties’ financial experts shall work together to assist the parties.
Costs
[109] If the parties cannot otherwise agree on Costs, they shall send written submissions no longer than three pages, to me at Osgoode Hall, within 30 days of the date of this Order, together with Bills of Costs, time dockets and any case law relied on, as well as any Offers to Settle.
Greer J.
Released: December 27, 2012
COURT FILE NO.: FS-12-375167
DATE: 20121227
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY LAW
BETWEEN:
CHRISTINE McCAIN,
Applicant
– and –
MICHAEL McCAIN,
Respondent
ENDORSEMENT
Greer J.
Released: December 27, 2012