SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 03-FA-12125-FIS
DATE: 20130626

RE: CYNTHIA COOK a.k.a. CYNTHIA MARGUERITE WAYE, Applicant

AND:

GEORGE RICHARD COOK, Respondent

BEFORE: STEVENSON, J.

COUNSEL: Leonardo Mongillo, for the Respondent

DATE HEARD: June 14, 2013

E N D O R S E M E N T

Introduction

[1] The Applicant, Cynthia Cook also known as Cynthia Marguerite Waye (“Ms. Waye”) has brought a motion seeking retroactive and ongoing spousal support from the Respondent, George Richard Cook (“Mr. Cook”); that Mr. Cook name her as irrevocable beneficiary under his life insurance policy; medical, dental and extended health coverage; a cost of living adjustment to support payments; a non-depletion/preservation order; a restraining order and costs.

[2] Mr. Cook has brought a motion to dismiss or stay Ms. Waye’s motion on account of her failure to deliver full disclosure and he also seeks an order scheduling a case conference with a focus on clarifying the pleadings in the proceeding and determining issues for trial and costs.

Background

[3] The parties were married on June 27, 1974. They have two children, Christopher and Ashley who are independent.

[4] The parties separated on July 10, 2003 but continued to live separate and apart in the matrimonial home until August 15, 2003.

[5] At the time of separation Mr. Cook contends that he was retired as of June 2002, having spent 30 years in the information technology business. He acknowledges that he achieved financial success in the late 1990s but that since that time there have been significant changes in his industry. From 1996 to 2002 he was involved in venture management in Europe and North America. The parties resided in Europe for a number of years during the marriage for Mr. Cook’s employment.

[6] Mr. Cook earned significant income during the parties’ relationship. Ms. Waye contends that he has continued to work since separation and has earned significant income, earning approximately $100,129 in 2011 and $109,999 in 2012. He lost his most recent employment held since 2011, in January 2013.

[7] Ms. Waye obtained a degree in Inuit Art History and in approximately 1998 left her employment at the Art Gallery of Ontario where she was an Assistant Curator of Inuit Art, to move to Germany with Mr. Cook and then later England for his employment. She was employed outside the home for approximately five years during the parties’ marriage. Since separation she submits that she has struggled to secure employment and she has assisted her daughter Ashley in running Ashley’s retail stores in Muskoka without remuneration.

[8] In May 1999 Mr. Cook’s shares in a high tech company were sold and three trusts were created. There trusts were: the Cook Cottage Trust; the Performance Star Trust; and the Caphca Trust.

[9] The Cook Cottage Trust owns the matrimonial home which is a cottage in Muskoka. Mr. Cook contends that at the date of separation the cottage was appraised at a value of $4,000,000 and retains significant value. Ms. Waye and the two children are some of the beneficiaries of the trust. Ms. Waye has resided in the property since the date of separation.

[10] Ms. Waye contends that the cottage has a value of approximately $1,500,000 currently and is not worth $4,000,000 as stated by Mr. Cook. Mr. Cook brought claims against the trust for loans he provided to the property which litigation involved the children. The claim was resolved for the amount of $500,000 which was reduced to $250,000. Mr. Cook contends that Ms. Waye has been actively disputing the sale of the cottage through costly litigation.

[11] The Performance Star Trust was the subject of negotiation at a mediation-arbitration between the parties post-separation. Both parties received approximately $1,300,000 from the trust as each was a beneficiary of the trust. Both parties contend that they have used up all of their respective funds from this trust.

[12] The Capcha Trust was created to purchase a home for Ms. Waye’s mother. The property sold on April 27, 2012.

Retroactive and Ongoing Spousal Support

[13] Ms. Waye contends that she is in desperate need of support. She acknowledges that Mr. Cook lost his employment in January 2013 but she is requesting that the court impute an income to Mr. Cook in the amount of $100,000. She acknowledges that Mr. Cook no longer makes $350,000 gross or more per year but submits that Mr. Cook has been working since separation and is capable of earning $100,000 as shown by his latest tax returns.

[14] Ms. Waye further submits that she made a claim for spousal support in her initial pleading but that Mr. Cook indicated to the lawyers and to the court that he was retired and was not earning an income. She contends that he has not been forthright and that he did not advise her that he was earning an income when he should have done so. This is the reason for her delay in bringing a motion for spousal support. She contends that Mr. Cook has raised the issue of the trusts and disclosure as a smokescreen and that she has provided the majority of the essential disclosure. Ms. Waye contends that neither party has provided all disclosure. She states that the Cook Cottage Trust is discretionary and there is no guarantee that she will receive significant funds. She also disputes the value of the cottage.

[15] Mr. Cook contends that Ms. Waye has brought her motion for spousal support nine years after separation and has not provided an adequate explanation for her delay. He contends that Ms. Waye received significant funds since the date of separation. He submits that Ms. Waye has still not provided full financial disclosure, has filed an improper Financial Statement and provides no evidence linking her current need for support to the marriage. It is Mr. Cook's position that the parties each received an equal amount of approximately $1,300,000 from the Performance Star Trust and that since the division of these funds, Ms. Waye has loaned significant funds to a trust and to her son.

[16] It is also Mr. Cook's position that Ms. Waye has been working for the parties' daughter Ashley and that she has failed to disclose joint bank accounts and joint credit card accounts that she holds with Ashley as part of the disclosure process. He further contends that she has not disclosed accounts which she may have with the parties' son Christopher. Additionally, he contends that Ms. Waye has not disclosed her efforts to secure employment since separation and has not provided proof that she receives no remuneration from Ashley's business where she states she volunteers her services.

[17] Mr. Cook further contends that Ms. Waye continues to control the majority of the family assets in that she resides in a $4,000,000 cottage property and possesses valuable antiques or other property that have yet to be divided as the equalization of net family property has not taken place. It is his position that the matter needs to be properly dealt with at trial including the issues of entitlement to spousal support and equalization of net family property. It is also his position that the parties would benefit from attending a case conference where the issues for trial can be fully canvassed and determined.

[18] It is clear from a review of the extensive material filed by both parties for these motions that there is much conflicting evidence. What is clear is that presently Mr. Cook is not employed having lost his employment in January of 2013. There is no question that Mr. Cook was quite successful in the past but he is now 65 years of age and without employment.

[19] His evidence is that he came out of retirement as a result of his inability to afford his debt and living expenses in 2006. Since the date of separation, he used approximately $200,000 that he received from his share of the Performance Star Trust post-separation to invest in a company but incurred a $100,000 capital loss which he was not able to realize against his income because he had no capital gains. He contends that his income in 2006 and 2007 was a negative return on capital. He further contends that his income through 2008 to 2010 was nominal. In 2011 he earned $100,129 gross and $109,999 gross in 2012 from a company Riva initially as a consultant and then later prior to his termination in January 2013, as Vice President of Sales and Marketing. He contends that his average income over the last several years is low.

[20] It is Mr. Cook's position that in his industry, he is now competing with 30-year-olds and that it is difficult for him to compete and secure employment. He does not agree with Ms. Waye's position that he is able to secure employment of at least $100,000 gross per year. He submits that he no longer has any prospects of employment or capital to invest. He further contends that Ms. Waye owes him a substantial equalization payment.

[21] Ms. Waye seeks to have the court impute an income to Mr. Cook of $100,000 gross and to order retroactive spousal support. As stated in the Spousal Support Advisory Guidelines, in determining the income of the parties for spousal support, reference is made to the Federal Child Support Guidelines (SOR/97-175, as am.) ("Child Support Guidelines) definition of income. Additionally, the principles that apply in determining whether to impute income are the same in both child and spousal support cases. (see Smith v. Smith, 2012 ONSC 1116, [2012] O.J. No. 800 at para. 80)

[22] Section 19(1)(a) of the Child Support Guidelines reads as follows:

19. (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:

(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;

[23] In the Ontario Court of Appeal decision of Drygala v. Pauli, 2002 41868 (ON CA), [2002] O.J. No. 3731 (C.A.), the court set out at para. 23, the three-part test in applying the provision under s. 19. The first part of the test is to determine whether the spouse is intentionally under-employed or unemployed. If so, the second part of the test asks is the intentional under-employment or unemployment required by virtue of his or her reasonable educational needs, the needs of a child or reasonable health needs? If the answer to the second part of the test is negative, the third part of the test is what income is appropriately imputed in the circumstances?

[24] In Drygala at para. 28, the court determined that "intentionally" means a voluntary act. The Court also stated that: "[t]he parent required to pay is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning.... The word ‘intentionally’ makes it clear that this section does not apply to situations in which, through no fault or act of their own, spouses are laid off, terminated or given reduced hours of work." The court also found that there was no requirement of bad faith.

[25] As stated in the Ontario Court of Appeal decision of Homsi v. Zaya, 2009 ONCA 322, [2009] O.J. No. 1552, at para. 28: "The onus is on the person requesting an imputation of income to establish an evidentiary basis for such a finding."

[26] Based on the evidence before me I do not find that Mr. Cook is intentionally unemployed. Ms. Waye has not discharged the onus at this stage as she has not provided any evidence to suggest that Mr. Cook has had available to him job opportunities and that he has voluntarily chosen not to pursue those opportunities. I accept that at Mr. Cook's age it would be more difficult for him to secure employment and the opportunities that were once available to him when he was much younger are not as available today.

[27] Further, with respect to Ms. Waye's claims for retroactive spousal support, there is too much conflicting evidence before the court in order to make this determination on a motion. There are events that have occurred post-separation with respect to the parties' trusts and the use of those funds by the parties that are complicated and need to be delved into further at a trial as those events could impact entitlement to spousal support. There are also unresolved issues relating to the equalization of net family property that also need to be fully canvassed at trial and which could impact spousal support. Ms. Waye is certainly entitled to claim retroactive spousal support at trial but the Judge at trial will be in a much better position to assess the issue of spousal support after hearing all of the evidence which will be tested by cross-examination.

[28] Ms. Waye has also brought a claim for medical/dental coverage by Mr. Cook for her benefit. Mr. Cook presently does not have any coverage. In any event the parties are divorced and Ms. Waye would not be entitled to coverage. Ms. Waye also seeks to be designated as a beneficiary under Mr. Cook's life insurance policy. Mr. Cook does not have a life insurance policy and given there is no current spousal support obligation and the cost to obtain such a policy would be prohibitive, I decline to grant this request.

Outstanding Disclosure Issues and Equalization of Net Family Property

[29] There is much disagreement as to whether there has been proper disclosure made by Ms. Waye. This issue should be more properly addressed at a case conference given the conflicting views of the parties and the need to ensure that disclosure is complete by both parties prior to trial.

[30] There is also conflicting evidence as to whether the parties' chattels including antiques have been equalized with Mr. Cook submitting that this has not yet been completed although there has been some division of chattels. From a review of the evidence, it appears that the parties did attempt to mediate/arbitrate these issues but that a final determination has never taken place.

[31] There is also conflicting evidence as to whether the equalization of net family property needs to be finalized with Mr. Cook submitting that this issue remains outstanding. There are complicated issues concerning trusts and the cottage property that need to be fully canvassed to determine their relevance to equalization of net family property and spousal support. The court has attempted to case manage this matter in the past and there is also no question that the parties would benefit from some case management prior to the matter proceeding to trial. I understand that this was suggested almost a year ago by Klowak J. This would enable both parties to properly determine the issues to be heard at trial which will also benefit the court so that the matter proceeds efficiently. Further, this will allow both parties to resolve any outstanding disclosure issues and address those issues fully with the assistance of a Judge prior to trial, which will be to the benefit of both parties.

Order

[32] I order the following:

i) the applicant's motion for retroactive and ongoing temporary spousal support is dismissed without prejudice to the Applicant's right to seek retroactive and ongoing spousal support at trial;

ii) the parties shall schedule a case conference to be held no later than October 15, 2013 at which time all disclosure issues shall be considered and issues determined for trial. The parties shall file Case Conference Briefs in accordance with the Family Law Rules and shall file updated lists with respect to each party's position regarding outstanding disclosure;

iii) the parties shall serve and file updated sworn Form 13.1 Financial Statements (Property and Support Claims) two weeks prior to the Case Conference;

iv) both parties shall immediately advise each other if there is a change in their income and if either party obtains employment they shall immediately advise the other party in writing of the particulars of their employment;

v) costs of these motions are reserved to the trial Judge.

Stevenson, J.

DATE: June 26, 2013