CITATION: Wakeley v. Wakeley, 2015 ONSC 3561
COURT FILE NO.: FS-10-23
DATE: 2015/06/17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
LYNNE THERESA WAKELEY
J. J. Chaimovitz, for the Applicant
Applicant
- and -
PHILLIP ROSS WAKELEY
- Snelius, for the Respondent
Respondent
HEARD: May 12, 13, 14, 15, 16, 20, 21, 22, 23, June 30, July 2, 3, 4, September 29, 30, 2014
The Honourable Mr. Justice Harper
Issues
Spousal support with respect to entitlement and as to quantum
Child support
Retroactive spousal and child support
Section 7 expenses contribution
Declaration that Phillip Wakeley is a 50 percent owner in 1555937 Ontario Inc. Wendy Wakeley being shown as the sole shareholder of 1555937 Ontario Inc.
[2] Much of this trial was occupied by evidence of what the available income of Phillip Wakeley has been and will be in the future. Both factual and expert witnesses were offered by each party in order to advance their respective positions on this issue. The astronomical amount of money that has been spent within this litigation process is a reflection of the extreme positions taken by each party. Positions that were solidified by the parties conduct and opinions expressed by the various experts who testified. That combination caused the complexity of this trial. This matter should have been a straight forward issue of spousal entitlement and quantum of support as well as what should be the appropriate amount of child support. In these reasons, I hope to untangle the web that this combination created.
Background
[3] The Applicant (Lynne) and the Respondent (Phillip) were married on July 7, 1990.
[4] Lynne is 47 years of age (born July 9, 1967) and Phillip is 51 years of age (born October 18, 1963).
[5] Lynne and Phillip had three children of their marriage namely, Rochelle Celine Wakeley, born December 13, 1996 (18), Blair Alan Wakeley born December 13, 1996 (18) and Sierra Lynne Clarisse Wakeley, born November 4, 1999 (15).
[6] Lynne and Phillip separated on June 22, 2000 after 10 years of marriage.
Circumstances of Lynne and Phillip from Date of Marriage until Date of Separation
[7] At the date of marriage, Lynne had a Diploma as a Child and Youth Worker. She obtained that in 1988. When she got married she was working at W. Ross MacDonald School for the Blind as an educational assistant. She remained at that job until 1994.
[8] Phillip had completed a two year program at Conestaga College and he was employed at Moore Business Forms at the date of marriage. Shortly after marriage, Phillip left his employment and started his own business that was called Lintec Business Forms. Initially, he ran that business out of the matrimonial home.
[9] Phillip moved his business from the home operation to a building that also housed another printing business. That business had some equipment, such as printing presses, that Phillip did not have. He was allowed to use those presses in order to print letterheads, business cards, and envelopes, among other things. He contracted out the printing jobs that required more elaborate printing techniques at the early stages of his business.
The Lottery and Commencement of Printing Business
[10] In April 1994, Lynne won $897,000 in a lottery. On May 17, 1994, Lynne and Phillip incorporated a company called 1071723 Ontario Limited (107 Co.). Lynne and Phillip each owned 50 percent of the shares of this company. Its domain name was Lintec Business Forms.
[11] Both Lynne and Phillip were employees of 107 Co. They each received an annual salary of $60,000. Lynne and Phillip purchased 161 Hachborn St. in Brantford Ontario. The printing business was operated out of those premises. Lynne put up 50 percent of the money to purchase the property from her lottery winnings and Phillip put up the remaining 50 percent from money given to him from his father.
[12] On December 13, 1996, Lynne gave birth to the twins, Rochelle and Blair. Aside from assisting with the start-up of the printing business, Lynne primarily cared for the children and managed the household for the next four years until the parties separated.
[13] Lynne and Phillip incorporated a second company in January 1997. This company was 1215406 Ontario Inc. (121 Co.). Once again, the shareholding of the company was 50 percent each for Lynne and Phillip. This company was a holding company that held the land at 161 Hachborn from which the printing business operated. The printing business started to grow and both Lynne and Phillip drew equal salaries of $50,000.00, which later increased to $60,000.00 until the date of separation.
[14] On November 4, 1999, Lynne and Phillip had their third child, Sierra. Approximately eight months after Sierra was born, Lynne and Phillip separated on June 22, 2000.
Circumstances from Separation in June 2000 until Ontario Court Order of February 2005
[15] At the date of separation, Lynne stayed in the matrimonial home with the three year old twins and eight month old Sierra. Phillip stayed at the Hachborn St. property from which the printing business was being operated.
[16] On June 22, 2002, Phillip and Lynne entered into a separation agreement. This agreement gave Lynne custody of the children. Phillip was to have access on alternating weekends and mid-week and holiday access. Based on income attributed to Phillip in the amount of $120,000.00 per annum, Phillip was to pay child support for the three children in the sum of $1,881.00 per month and spousal support in the amount of $2,110.00 per month. In addition, Phillip was to pay 80 percent of all extraordinary expenses for the children.
[17] With respect to the property, Phillip was to have sole ownership of the business and real estate holding company that owned the building and land where Lintec Business Forms (107 Co.) operated. He also got the 33-foot Baja boat and a corvette motor vehicle. Lynne got the matrimonial home and the cottage.
Motion to Change in Ontario Court of Justice
[18] In June of 2005, Phillip brought a motion to change his support obligations. According to Phillip, the printing business had taken a down turn and his income was drastically reduced. Justice Edwards released his decision on June 23, 2005. He set Phillip’s income at $60,000.00. He reduced the child support payments to $1,076.00 per month and spousal support to $1.00 per annum.
[19] According to Lynne, she had to live off the investments that remained in her name as a result of her lottery winnings. She had gone back to school and graduated from teachers college in April of 2004. From the date of separation in June of 2000 until the separation agreement in 2002, Phillip continued to give Lynne the sum of $60,000.00 from the printing business. From 2002 until 2004, Phillip paid in accordance with the separation agreement.
[20] Lynne did not obtain her teaching certificate until 2005. When she obtained her certificate, Phillip told her that he would not give her another cent. He told her to get a job and support herself. He stopped paying any support and Lynne brought her separation agreement to the Family Responsibility Office for enforcement. That action prompted Phillip to bring a motion to change and lower his support.
Lynne’s Claims for Spousal Support:
Compensatory Lynne’s Position
[21] Lynne claims that her role within the marriage contributed to Phillip’s very successful printing business and resulted in his high standard of living and income stream.
She allowed Phillip to advance his career in the printing business that they both had started while she stayed at home to give birth and care for the children and the household. She acted to the detriment of her career and to his benefit.
She also claims that she used a substantial portion of her lottery winnings to pay off all of their debts and to start up the printing business. Later she had to use all of her remaining savings to live on because he misrepresented his income to lower his support in 2005.
Lynne also states that, although she obtained a teaching certificate, she has been unable to get a full time job. She has carried the excess burden of child care since separation. The children have special needs and she has had to struggle to meet their needs and work as a supply teacher at the same time.
The Children after Separation
[22] According to Lynne, Phillip’s payments in accordance with the agreement they entered into in 2001 were sporadic. She also stated that Phillip started to see the children less and less. By the summer of 2004, Lynne stated that Phillip did not see the children at all. He never took the baby on an overnight basis.
[23] Lynne stated that by 2007, Phillip stopped taking the children at all. He would only take them out for dinner from time to time.
The Children’s Special Needs
[24] Both of the twins, Blair and Rochelle, were diagnosed with Attention Deficit Hyperactive Disorder. By the time Blair turned 17 years of age, he presented significant behavior problems. He was very oppositional. In 2013, Blair was using drugs and alcohol to excess. He damaged property and, on a couple of occasions, he went to his mother’s cottage, without permission, and had a huge party and trashed the place. He was not going to school and eventually suspended for his conduct. Lynne tried to take Blair to counselling but this was to no avail.
[25] Lynne testified that she reached out to Phillip and asked him to help out. She told him that Blair needed a role model and some structure. He refused to help and told her that he had his own problems. Lynne kicked Blair out of her house approximately six weeks prior to the start of trial. He lived for a while with Lynne’s father. According to Lynne, Blair responded more to her father. However, her parents are in their early 80s and cannot tolerate this kind of stress. Blair was not able to return to live with his mother by the start of this trial. However, it was Lynne’s hope that Blair would return to live with her very soon.
[26] The child Sierra has also been a significant challenge. She was in grade 9 at the time of the trial. She was doing poorly and skipping school. According to Lynne, not only has Sierra been very oppositional, she has mood swings that are extremely concerning.
[27] Lynne stated that Sierra became very depressed in 2012. She told her mother that she was thinking of hurting herself. Lynne made numerous efforts to get Sierra into counselling. However, she did not progress enough and, by late in 2012, tried to kill herself. In January 2013, Sierra drank large quantities of vodka right out of the bottle and ended up in the hospital. As a result, she became involved with a treatment center, Woodview Children’s Mental Health Center in Brantford. Previous to that she was seeing counsellors at the school. Phillip did not take the child to any of the counselling sessions.
[28] Sierra was also diagnosed with an eating disorder; she was referred to an eating disorder clinic at McMaster University Hospital. Lynne accompanied her to the hospital once per week. During March break 2013, Lynne took Sierra to the clinic. Phillip stated that he was too busy and for the most part he could not attend at the clinic. On one occasion, Lynne took her daughter to the emergency at the hospital because she had been drinking large amounts of alcohol. According to Lynne, she called Phillip who stated that he was too busy and would talk to them the next day. Phillip did not come to see his daughter until three or four days after she had been admitted to the hospital. Lynne was with Sierra every night.
[29] By the time of the trial, the child was still very depressed and not consistent with her involvement in counselling. A few weeks prior to the trial, Sierra texted her mother and stated that she was having bad thoughts about harming herself again. Lynne feels that she cannot tell her School Board about the problems she is facing with the children as she does not want to jeopardize any chances of getting a full time position with the Board.
[30] The child Rochelle does not have the special needs of her siblings. Lynne describes her as a “pretty good kid.” However, Rochelle puts a lot of pressure on herself. She wants to be a nurse and she volunteers at the Brantford General Hospital. Phillip got her a part time job at a car dealership. She wants to save and get money for a car. She is enrolled at Mohawk College in a full time course.
[31] While caring for her children, Lynne has been taking jobs as a supply teacher. At the time of the trial, she was working for three different school boards: Brantford, Simcoe and Cayuga. That made her responsible for 200 children instead of only one class of 35. She had to prepare lessons for all the different classes and grade them all.
[32] Lynne has applied for a full time position but as yet has not been accepted.
[33] Her earnings as a supply teacher as of 2013 were $39,311.00.
[34] Phillip testified that in the first few years after separation he saw the children during the week but did not feel comfortable taking the seven month old overnight. He stated that there were conflicts with his wife over access exchanges. She would not give him clothes for the children to take on the visits, which he felt was not acceptable. He claimed that, as the children got older, he made access arrangements directly with them.
[35] Phillip did not deny that he was not involved with Sierra’s counselling. He agreed that he would not take Blair in to live with him. He knew that Blair had trashed Lynne’s cottage, and that he did not see the children often but, he insisted that he does see them.
[36] I find that Lynne was very credible in her evidence with respect to the children and their needs. I find that she has carried the excess burden with respect to the children and that has had a direct impact on her ability to maximize her earning capacity. Despite all of the challenges with the children, she did her best and in some circumstances went beyond what would have been expected of her. I find that her taking on the role that she did both before separation and after with respect to child care goes far to justify a compensatory feature of continuing spousal support for her.
Chronology of the Lintec Printing/Labeling Business from 2000 Forward
[37] From the date of Phillip’s separation with Lynne, he made numerous purchases of properties, incorporated numerous companies and set about to advance his printing business. In 2002 and 2003, Phillip and Wendy Wakeley (Wendy), who was Phillip’s girlfriend at the time, set up business operations that involved Printing and Labelling. The printing operation was referred to as Lintec Print (LP) and the labelling was referred to as Lintec Labels (LL).
[38] Some of the more significant facts that I find from the evidence are as follows:
On October 2, 2000, Phillip purchased a home at 10 Bellholme Ave, Brantford, Ontario for $198,000. Wendy moved in with Phillip in or about the month of November 2000. On April 6, 2001, Phillip purchased a lot known as Lot 567, 24 Rogers Avenue, Long Point, Ontario. This purchase was for approximately $128,000.
On November 20, 2001, Phillip and Wendy incorporated a company, 149851 Ontario Inc. (149 Co.), the shareholding of this company was represented differently at different times in this litigation and will be discussed further later in these reasons.
On March 27, 2002, Phillip sold his property at 10 Bellholme for $225,000.00. He netted approximately $25,000 from that sale.
On April 18, 2002, Phillip purchased a lot in Oakland for approximately $55,000.
In the early part of February 2003, Phillip sold his 33-foot Baja boat for approximately $100,000.
On February 26, 2003, Wendy incorporated a company called 1555937 Ontario Inc. (155 Co.), of which she is the sole shareholder. This company has contact information that is the same as Phillip’s printing business. Phillip is shown as the contact person. 155 Co. operated under the name Lintec Print Management until 2007.
On May 2, 2003, 149 Co. purchased a lot in Port Dover (Don Jon) for $200,000 cash.
Phillip and Wendy got married on October 4, 2003.
On April 15, 2004, 149 Co. sold the Oakland Lot for $77,000. This sale netted approximately $20,000.
On April 22, 2004, 121 Co. (Phillip’s real estate holding company) purchased a 36 foot Baja boat. This was noted as an asset of that holding company.
In July 2004, Phillip brought a motion to vary and reduce his child and spousal support.
On January 4, 2005, Phillip amalgamated his company 1071723 with his company 1071722 Ontario Inc and it became Lintec Business Inc. (107 Co.).
In 2007, 155 Co.’s operating name changed from Lintec Print Management to Lintec Print Solutions.
On January 13, 2010, Lynne started this application for child and spousal support
Lintec Group of Companies - Ownership Chart from 2001 to 2012
Current & Former Business Names:
1071723 Ontario Limited predecessors to Lintec Business Forms. Inc. :
incorporated May 17, 1994. Shares held by:
Phillip Wakeley – 50 percent
Lynne Wakeley – 50 percent
Public Domain Name was Lintec Business Forms.
Print Industry
Operating Companies
Lintec Print Solutions Inc. amalgamated January 4, 2005 successor to 1071723 Ontario Limited & 1071722 Ontario incorporated as Lintec Business Forms Inc.
Name change to Lintec Print Solutions Inc. Nov. 27, 2009
Phillip Wakeley – 100 percent Lintec Print & Label Solutions
1555937 Ontario Inc.
Operating as:
Lintec Print Management, from about 2003 to 2007
Lintec Print Solutions, from about 2007 to 2009
Lintec Label Solutions, from about 2009
February 26, 2003 Wendy Wakeley – 100 percent Lintec Print & Label Solutions
Real Estate Holding
Companies
1215405 Ontario Inc.
1498541 Ontario Inc.
Retail, Women's
Lingerie
Sinfully Fun Lingerie a.k.a. Rosetta' s Fine Lingerie start-up date unknown owned
Operating as of October 2004
Sinfully Fun Lingerie
Print, USA,
Phillip’s evidence was that this company was never active. It was not disclosed by Phillip in pre-trial productions
Lintec Print Management, Inc., Nevada Corporation, USA September 19, 2001
Phillip testified it was inactive. Owned by Phillip Wakeley, [his former accountant, Dean Jones, was Director].
Significant Chronology of These Proceedings
[39] On May 4, 2010, Justice Arrell made a disclosure Order that represented the standard order for disclosure pursuant to the Child Support Guidelines. The following represents the struggle to obtain the financial disclosure:
On October 1, 2010, Christine Minelli’s, Lynne’s accountant, provided Phillip’s counsel a list entitled, “Request for Information.”
None of the disclosure was provided. Lynne brought a motion to obtain an order for this disclosure. Phillip opposed the motion. Lynne also amended her motion to add Wendy and her company, 155 Co., as parties.
Phillip brought a cross motion to have Ms. Minelli’s affidavits struck for bias and to have her removed as an expert.
Both Wendy and Phillip took the position at the motion hearing that 155 Co. was Wendy’s company and therefore, Lynne was not entitled to financial disclosure of the company.
Justice Arrell released his decision on September 23, 2011. He added Wendy and 155 Co. as parties. He also ordered a substantial portion of the “Request for Information” be disclosed, but not all of the requested information. Justice Arrell also dismissed the motion to strike the Minelli affidavits and he refused to remove her as Lynne’s expert.
By February 2012, the disclosure Order by Justice Arrell had still not been complied with. Lynne brought a motion to strike Phillip’s Answer. She also brought a motion to seek temporary child and spousal support. She also asked the court to order that the income earned by Wendy and 155 Co. be amounted to Phillip.
That motion was not heard until July 2012. By that time Phillip had complied with the disclosure Order. Justice Arrell released his reasons for the support motion on July 6, 2012. He ordered child support in the amount of $2,135.00 per month and spousal support of $2,000.00 per month. He reinstated the support and based it on the income of $120,000 per annum for Phillip that the parties had agreed to in their separation agreement of 2002.
In April 2013, Lynne brought a further motion for disclosure. On April 12, 2013, Justice Parayeski made an Order requiring Phillip and Wendy’s numerous corporations and the Royal and Toronto Dominion Banks to make disclosure.
This matter was originally scheduled for trial in July 2013. That could not be accomplished due to judicial scheduling. Just prior to the October trial sittings Lynne was advised that Wendy and Phillip were now separated.
The matter was set for trial for May 2014.
[40] After Phillip obtained the Order reducing his support payments in 2005, Lynne became increasingly distressed over what she saw as signs of her living a lifestyle that far exceeded his claimed impecuniosity. She testified that she learned that Phillip and Wendy were living in a home in Port Dover they had built on a lot they had bought. She also learned that they put it up for sale for the amount of $2,800,000. That home was eventually sold on June 30, 2012, for $1,750,000. This was one of the numerous facts that led Lynne to seriously question how in 2005, Phillip represented that his business was so bad that he was only making $60,000.00 per annum?
[41] In addition to the land and house in Port Dover, Lynne testified that shortly after separation, Phillip purchased a Baja boat that was bigger than the Baja boat they had together. Their boat was 12 feet and the one he purchased was 18 to 20 feet. According to Lynne, Phillip spent $40,000 out of their line of credit to purchase the larger boat. By 2006, Lynne testified that Phillip had a third Baja boat that was even larger. This boat would have cost approximately $150,000 to $200,000. That boat was purchased only one year after Justice Edwards reduced Phillip’s support.
[42] When Lynne started to look into the ownership of the property in Port Dover, she learned that the property was initially placed into the name of one of Phillip and Wendy’s companies: 149 Co. It was later transferred to Phillip and Wendy and then to Phillip alone by October 5, 2005. By November 18, 2009 that same property was transferred back to Phillip and Wendy.
[43] According to Lynne, her lifestyle and savings were plummeting while Phillip was living an extravagant life style. Lynne started this present action in 2010. She hired Christine Minelli to look into Phillip’s available income from the date of separation to the present. Lynne relayed her suspicions of her husband misrepresenting his income to Ms. Minelli. Ms. Minelli was first engaged to do an income analysis.
The Businesses and Assets of Phillip and Wendy
[44] When Lynne and her professional team, assisting her in this litigation, sought to get the financial information that was necessary to determine Phillip’s actual available income, they were met with resistance. Phillip took the position that he had no interest or claim to Wendy’s financial information about her companies. This resistance played a major role in escalating this litigation and the costs that spiraled to excess.
[45] I find that Phillip and Wendy attempted to create a fiction that they were operating separate businesses and had separate and distinct assets and income from 2000 up to and including the trial. This attempt to create this fiction was driven by Phillip and Wendy’s belief that Phillip had paid enough to Lynne and he should not have to pay one more cent. I accept Lynne’s evidence that Phillip made that very threat to her when he stopped paying her support in 2004 and she was forced to have the Family Responsibility Office (FRO) enforce their separation agreement. Phillip acknowledged that although the separation agreement contemplated reviewing Lynne’s support after she obtained her teaching certificate, it did not terminate at that event. Nevertheless he stopped paying and after the FRO got involved he brought a motion to change his support obligations.
[46] Phillip brought a motion in the Ontario Court of Justice to have his support payments reduced. At that time, his representation of the fiction of his assets and income had just started. He did not disclose to the Ontario Court anything about Wendy’s income or companies. He had already started the process of merging his printing business operations with what they represented to be her labelling business operations. From that point in time, until the start of this trial, Phillip took the position that Wendy’s companies were legally owned by her and had nothing to with him.
Accounting Experts at Trial
[47] Counsel for Lynne sought to qualify Ms. Christine Minelli as an expert in forensic accounting and in assessing income for support purposes. Her qualifications were not challenged by Phillip’s counsel. I ruled that Ms. Minelli had sufficient education and experience in the fields that she was proffered as an expert. I also ruled that as there was no challenge to her qualifications in the area’s she was offered to give an opinion on any issue of objectivity and neutrality would be considered in the weight to be given her evidence.
[48] Ms. Minelli testified that she was initially hired to determine Phillip’s income for support purposes. Lynne expressed that she could not reconcile what Phillip was alleging as his income with his lifestyle. However, Ms. Minelli’s involvement in this file evolved to something much more. After she issued her first report, Ms. Minelli followed up her involvement by swearing six affidavits in support of motions for disclosure and one to defend against a motion to remove her for bias. In addition, she issued three expert reports; one was a supplemental report and one was to critique the expert, Andy McCrae, hired by Phillip, and one to consolidate opinions of both accountants and to express final opinions. Some schedules and opinions were adjusted during the process of this trial when certain statements and reports of the other expert were reviewed.
[49] Ms. Minelli felt that after she issued her first report in September 2010, her involvement changed to a more intense analysis of a forensic investigation. She stated that when she conducts a forensic investigation she must look at the information given to her with skepticism. She stated that, her duty as a forensic accountant was to seek out corroboration and independent sources. I find that Ms. Minelli most certainly looked at all of the information that she was provided from time to time in a skeptical manner. She stated that her approach was to look for “concealment and diversion of income and assets.”
[50] Her initial mindset was justified by the manner in which Phillip and Wendy conducted themselves in the years leading up and throughout this litigation. She testified that her initial concerns were heightened when she learned that Phillip was refusing to make disclosure and he was reluctant to give any information about his second wife, Wendy’s, income and involvement in the printing business. I agree that this initial mind set and process commenced to obtain the necessary data was justified given Phillip and Wendy’s conduct.
[51] Nevertheless, in family law matters especially, every professional owes a duty to their clients to conduct themselves in a manner that is proportionate to the potential outcome. The costs of experts cannot be out of proportion to the potential gains that might be realized. In my view, when such costs escalate to the point of being excessive in relation to the potential outcome, the independence and objectivity of the expert may come into question.
[52] The Supreme Court of Canada provided an extremely helpful review of the law relative to the importance of experts being objective, neutral and impartial. In White Burgess Langille Inman v. Abbott and Haliburton, 2015 SCC 23, Cromwell J. stated commencing at para 12:
[12] Recent experience has only exacerbated these concerns; we are now all too aware that an expert’s lack of independence and impartiality can result in egregious miscarriages of justice: R. v. D.D., 2000 SCC 43, [2000] 2 S.C.R. 275, at para. 52. As observed by Beveridge J.A. in this case, The Commission on Proceedings Involving Guy Paul Morin: Report (1998) authored by the Honourable Fred Kaufman and the Inquiry into Pediatric Forensic Pathology in Ontario: Report (2008) conducted by the Honourable Stephen T. Goudge provide two striking examples where “[s]eemingly solid and impartial, but flawed, forensic scientific opinion has played a prominent role in miscarriages of justiceˮ: para. 105. Other reports outline the critical need for impartial and independent expert evidence in civil litigation: ibid. at para. 106; see the Right Honourable Lord Woolf, Access to Justice: Final Report (1996); the Honourable Coulter A. Osborne, Civil Justice Reform Project: Summary of Findings & Recommendations (2007).
[13] To decide how our law of evidence should best respond to these concerns, we must confront several questions: Should concerns about potentially biased expert opinion go to admissibility or only to weight?; If to admissibility, should these concerns be addressed by a threshold requirement for admissibility, by a judicial discretion to exclude, or both?; At what point do these concerns justify exclusion of the evidence?; And finally, how is our response to these concerns integrated into the existing legal framework governing the admissibility of expert opinion evidence? To answer these questions, we must first consider the existing legal framework governing admissibility, identify the duties that an expert witness has to the court and then turn to how those duties are best reflected in that legal framework.
[24] At the second discretionary gatekeeping step, the judge balances the potential risks and benefits of admitting the evidence in order to decide whether the potential benefits justify the risks. The required balancing exercise has been described in various ways. In Mohan, Sopinka J. spoke of the “reliability versus effect factor” (p. 21), while in J.-L.J., Binnie J. spoke about “relevance, reliability and necessity” being “measured against the counterweights of consumption of time, prejudice and confusion”: para 47. Doherty J.A. summed it up well in Abbey, stating that the “trial judge must decide whether expert evidence that meets the preconditions to admissibility is sufficiently beneficial to the trial process to warrant its admission despite the potential harm to the trial process that may flow from the admission of the expert evidence” at para. 76.
[40] I conclude that the dominant approach in Canadian common law is to treat independence and impartiality as bearing not just on the weight but also on the admissibility of the evidence. I note that while the shareholders submit that issues regarding expert independence should go only to weight, they rely on cases such as INCO that specifically accept that a finding of lack of independence or impartiality can lead to inadmissibility in certain circumstances: R.F., at paras. 52-53.
[49] This threshold requirement is not particularly onerous and it will likely be quite rare that a proposed expert’s evidence would be ruled inadmissible for failing to meet it. The trial judge must determine, having regard to both the particular circumstances of the proposed expert and the substance of the proposed evidence, whether the expert is able and willing to carry out his or her primary duty to the court. For example, it is the nature and extent of the interest or connection with the litigation or a party thereto which matters, not the mere fact of the interest or connection; the existence of some interest or a relationship does not automatically render the evidence of the proposed expert inadmissible. In most cases, a mere employment relationship with the party calling the evidence will be insufficient to do so. On the other hand, a direct financial interest in the outcome of the litigation will be of more concern. The same can be said in the case of a very close familial relationship with one of the parties or situations in which the proposed expert will probably incur professional liability if his or her opinion is not accepted by the court. Similarly, an expert who, in his or her proposed evidence or otherwise, assumes the role of an advocate for a party is clearly unwilling and/or unable to carry out the primary duty to the court. I emphasize that exclusion at the threshold stage of the analysis should occur only in very clear cases in which the proposed expert is unable or unwilling to provide the court with fair, objective and non-partisan evidence. Anything less than clear unwillingness or inability to do so should not lead to exclusion, but be taken into account in the overall weighing of costs and benefits of receiving the evidence.
[50] As discussed in the English case law, the decision as to whether an expert should be permitted to give evidence despite having an interest or connection with the litigation is a matter of fact and degree. The concept of apparent bias is not relevant to the question of whether or not an expert witness will be unable or unwilling to fulfill its primary duty to the court. When looking at an expert’s interest or relationship with a party, the question is not whether a reasonable observer would think that the expert is not independent. The question is whether the relationship or interest results in the expert being unable or unwilling to carry out his or her primary duty to the court to provide fair, non-partisan and objective assistance.
[53] In my opinion, concerns related to the expert’s duty to the court and his or her willingness and capacity to comply with it are best addressed initially in the “qualified expert” element of the Mohan framework: S. C. Hill, D. M. Tanovich and L. P. Strezos, McWilliams’ Canadian Criminal Evidence (5th ed. (loose-leaf)), vol. 2, at s. 12:30.20.50; see also Deemar v. College of Veterinarians of Ontario, 2008 ONCA 600, 92 O.R. (3d) 97, at para. 21; Lederman, Bryant and Fuerst, at pp. 826-27; Halsbury’s Laws of Canada: Evidence, at para. HEV-152 “Partiality”; The Canadian Encyclopedic Digest (Ont. 4th ed. (loose-leaf)), vol. 24, Title 62 ― Evidence, at §469. A proposed expert witness who is unable or unwilling to fulfill this duty to the court is not properly qualified to perform the role of an expert. Situating this concern in the “properly qualified expert” ensures that the courts will focus expressly on the important risks associated with biased experts: Hill, Tanovich and Strezos, at s. 12:30.20.50; Paciocco, “Jukebox”, at p. 595.
(2) The Gatekeeping Exclusionary Discretion
[54] Finding that expert evidence meets the basic threshold does not end the inquiry. Consistent with the structure of the analysis developed following Mohan which I have discussed earlier, the judge must still take concerns about the expert’s independence and impartiality into account in weighing the evidence at the gatekeeping stage. At this point, relevance, necessity, reliability and absence of bias can helpfully be seen as part of a sliding scale where a basic level must first be achieved in order to meet the admissibility threshold and thereafter continue to play a role in weighing the overall competing considerations in admitting the evidence. At the end of the day, the judge must be satisfied that the potential helpfulness of the evidence is not outweighed by the risk of the dangers materializing that are associated with expert evidence
[53] In this case, Ms. Minelli was influenced by Phillip and Wendy’s conduct. As I stated earlier, they created what I call the fiction of separation of their businesses. That launched Ms. Minelli into her role as a forensic investigator. However, I am of the view that Ms. Minelli then launched herself into the role of an advocate. She became rigid in her defence of positions that were not sustainable given the evidence that unfolded. She did not interview Wendy or Phillip. Instead she assumed they would merely stick to their affidavit evidence. She did not interview employees who could have enlightened her on their transition from LP to LL. She based her opinion on Wendy’s role within the Lintec Group as being merely an administrative assistant solely on information supplied by Lynne. Lynne represented to Ms. Minelli that Wendy’s only work experience was that of a stripper. Ms. Minelli also relied on the old bank notation in the bank’s annual review. That notation reflected that Wendy was an administrative assistant. That notation never changed over the years. I find that the notation by the bank was a mere carry over from year to year without any questioning by the bank as to whether or not the circumstances had changed. Ms. Minelli never changed from her original position that Wendy was a mere administrative assistant despite other evidence to the contrary.
[54] Ms. Minelli testified that she was owed a substantial amount of money as a result of her services. Just before this trial began she had Lynne sign a promissory note with a collateral security in the amount of $75,000 to support her fees registered on Lynne’s home. The security was for fees owed and for an estimate of fees to be paid at the conclusion of the trial. There was no evidence the exact amount that Lynne had already paid to Ms. Minelli by the time the collateral mortgage was placed on Lynne’s home. Ms. Minelli testified that she was financing Lynne but she had no doubt that Lynne would pay her bill. She stated that Lynne had been paying $500 per month and “she always paid [her] for almost 6 years of [her] involvement.” I find that Ms. Minelli certainly had an interest in Lynne being successful in this litigation especially given the extraordinarily high accounting costs. That finding has a seriously negative impact on her ability to be neutral and impartial.
[55] Although Justice Arrell did not remove her for bias when he heard a motion in 2010, he noted in his endorsement of July 2010 that the amount of money requested for interim disbursements, at that time $30,000, to pay for the expert accounting witness was extraordinary under the circumstances of this case. He ordered interim disbursements to be paid in the sum of $15,000. Ms. Minelli stated, in her voir dire to determine the extent to which she might be qualified as an expert, that she had been dismissed as an expert on one occasion when Justice Carpenter-Gunn expressed concern about the security in place relative to her outstanding fees. In that case, according to Ms. Minelli, the judge was concerned that Ms. Minelli’s client had signed an irrevocable direction that any monies ordered to by paid to her client from the family case were irrevocably assigned by her client to Ms. Minelli to pay her fees.
[56] Once an expert enters the courtroom to testify and give opinions to the court, even forensic accountants must provide that evidence in a neutral and objective fashion in order to allow the judge to have the confidence that the opinions expressed are a reasoned and thorough analysis of the appropriate data. I find that Ms. Minelli, at times, took on the role of an advocate for her client, Lynne. While I appreciate that it is a difficult line between resolute expression of one’s opinion and passionate advocacy, Ms. Minelli, in my view, crossed that line on numerous occasions. As a result, it was a challenge to sift through the opinions expressed in her testimony and determine which opinions were valid.
[57] Ms. Minelli stated that her scope of review consisted of 21 large briefs that related to four of Wendy and Phillip’s corporations with many intercompany and interpersonal transactions that took place from 2003 forward. This massive undertaking was justified by her statement that “when you are doing a forensic investigation you need both the skills and the mindset of skepticism.” She felt that she needed to apply her skills of being able to analyze vast quantities of data with a skeptical mind.
[58] Ms. Minelli’s starting point after her first report was issued in September 2010 was what she considered was a “huge forensic issue of determining who was the beneficial owner of 155 Co.” and therefore who was entitled to the income from that company.” It was her ultimate determination that Phillip was the 100 percent beneficial owner of all of the Lintec Group of companies that included 155 Co.
[59] I find that Ms. Minelli started with a hypothesis that Phillip owned and operated all of the Lintec Group of companies and she sought to confirm that with her investigation. She did not adjust when facts that supported an alternate conclusion presented themselves.
[60] I will only cite a couple of examples of many that I consider her rigid adherence to her theory despite alternate theories being more probable in the face of certain evidence. She testified that it was her view that the customers, equipment, and trained employees were transferred from LP to LL, stripping LP of assets and income and leaving Phillip’s income available for support artificially low. She was firm in her opinion that Phillip and Wendy migrated many of the LP customers to LL from 2002 to 2003. She was reinforced in her hypothesis when Phillip refused to provide client lists for the businesses.
[61] However, once the client lists were produced at trial, the evidence did not support the conclusion that most of the client migration from LP to LL was anywhere near as extensive as Ms. Minelli thought. The late production of these lists causes me concern. However, my concerns and conclusions are not synonymous. When I consider the testimony of both Phillip and Wendy, I conclude that their explanations were reasonable with respect to the many clients that did come to their group of companies as a direct result of their efforts of Wendy.
[62] Ms. Minelli also expressed the opinion that much of LL’s equipment that was paid for by LP was simply transferred over to LL with no payment. She also pointed out that the training on this equipment and new technology was paid for by LP and the employees simply moved over to LL with no compensation in return. This opinion was supported in the evidence and I find that the migration of trained employees and equipment did take place with no compensation flowing back to LP.
[63] While I agree with the latter conclusions, I found that I had to struggle to find supporting corroboration to her opinions that she expressed due to the manner in which she expressed them. Her advocacy placed a continuous fog on what was a valid opinion versus what was an unshakable position while advocating.
[64] Ms. Minelli stated she did not interview Mr. Ron Sciannalla, the Lintec Group or Companies’ accountant, Phillip, or Wendy. She felt that the accountant would be naturally biased due to the very nature of his relationship as the day-to-day accountant. I do not agree. By taking that position, Ms. Minelli did not give any consideration to the fact that the accountant might just act professionally and provide answers that may have shortened the process. Instead, she put herself in a position of continuing to “dig deep” with a forensic fury.
[65] Ms. Minelli made no request for Mr. McCrae’s working papers in order to determine the reasonableness of his conclusions after he had interviewed Phillip and Wendy. I am of the view that this attitude is a continuing extension of her litigious and “forensic” approach that exacerbated the conflict and made it more difficult to determine what evidence supported an opinion or an inference that I must draw.
[66] Ms. Minelli stated that in 2012, the financial statements of the respective companies show that LP had invested heavily in fixed assets in the range of approximately $800,000.
[67] That same year the investment was transferred to LL from LP. The value that was transferred was in the range of $500,000 on a depreciated basis. This was new equipment purchased in order to keep up with new technology to remain competitive. Ms. Minelli claimed it was Phillip who had the vision and gave no credit to Wendy. Ms. Minelli asserted that the training and development to work this equipment was all paid for by LP and was simply transferred to LL without compensation. I agree that the evidence supports many of her conclusions with respect to these transfers. However, she cannot conclude that Phillip was the sole visionary and Wendy continued to be the mere administrative assistant.
[68] I find that many of the intercompany transfers and transfers of assets from companies to personal ownership and back were not done properly and they do give the impression that a shell game was being conducted by both Wendy and Phillip. The Don Jon property is a prime example of an asset that goes from a company name to personal names then jointly to single ownership and back to joint ownership. No satisfactory evidence was given for these transactions. However, both accountants made proper adjustments to place them in their proper accounting places during the course of these proceedings and in some cases during the trial.
[69] My overall assessment of Ms. Minelli’s evidence is mixed. Her efforts were needed to some degree due to Phillip and Wendy’s conduct in regards to the complexity of the business structure that was set up and their stubborn adherence to their position that the profitable LL company was only Wendy’s and the much less profitable company LP was only Phillip’s. However, Ms. Minelli’s rigid opinion that Phillip should be declared the beneficial owner of all of the Lintec Group of companies is not supported on the evidence and cannot be supported in law.
Mr. Robert McCrae
[70] Mr. McCrae is an accountant and business valuator. I qualified him as an expert in business valuations and income analysis for support purposes. He was not offered as a forensic expert.
[71] Mr. McCrae filed four reports in these proceedings. Some were critique reports of Ms. Minelli’s reports; others were update and adjusting reports. Mr. McCrae or his associate, who assisted him with the gathering of information and organizing of the data, interviewed Phillip and Wendy. He also took a tour of the physical plant of the business operations. In addition, they reviewed the same data and financial statements reviewed by Ms. Minelli.
[72] Mr. McCrae stated that his goal from the outset of his involvement in this case was threefold:
To provide an estimate of Phillip’s income that would have been available for child and spousal support for the years 2005 to 2011
To provide an estimate of future achievable income for 2012 forward; and
To comment on Ms. Minelli’s reports
[73] Mr. McCrae felt that Phillip’s income could be estimated in two ways. The first was to consider him the 100 percent owner of all of the Lintec Group of companies and business operations. The second was to consider him a 50 percent owner of that same group. Mr. McRae felt the fairest and most reasonable approach was to combine all of the income expenses, assets and liabilities of all of the Lintec Group and assign Phillip with 50 percent of the income available. Mr. McCrae did not feel it was proper for him to assess whether Wendy worked in the business to such an extent so as to justify the salaries that were assigned to her. He stated that would be up to the judge given the evidence before him. He also did not see how Ms. Minelli could make that assessment. I agree with Mr. McCrae.
[74] He stated that he felt that was the approach that the Lintec Group’s bankers had always taken and that it more properly reflected the realities that he found given his review of the finances and his discussions with the individuals noted above and his tour of the business operations. Mr. McCrae stated that it was appropriate to combine the LL and LP businesses from an accounting perspective.
[75] I find that Mr. McCrae’s approach is the proper approach. I find that upon a consideration that Wendy has been and is still very active in the print and label businesses. I do not agree with Ms. Minelli’s opinion that Wendy should only be assigned a salary as an administrative assistant in the salary range of $38,000 per annum. The notation contained in the banking documents that Wendy was an administrative assistant is a notation that no one ever changed over the years. I do not take it as an ongoing updated representation of reality. A letter that was filed in evidence from the bank indicated that that notation about Wendy’s role in the company may not be accurate.
[76] I accept Wendy’s testimony in regard to her involvement in the business. She was very knowledgeable about the nature of the work and the clients. On the evidence before me on the balance of probabilities, I find that Wendy has become an active participant in the print and label business. She brings certain strengths to the operations such as her ability to network and attract clients. Her sales and marketing abilities cannot be dismissed as Ms. Minelli did. I do not find that Phillip is diverting income to Wendy by the fact that Wendy is receiving approximately half of the available income from the business.
The Income Available for Support
The Law
[77] Justice Nolan provided an excellent summary of the law relating to imputing income for support purposes in the case of Joy v. Mullins, 2010 ONSC 1742, commencing at para 28:
[28] Section 16 of the Guidelines deals with how the income of the spouses is to be determined and provides:
- Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General Form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.
[29] If a court considers that section 16, which refers to Line 150 income, does not provide the fairest determination of the income, keeping in mind the objectives of the Guidelines set out earlier in this judgment, the court may consider the pattern of income of the payor:
17.(1) If the court is of the opinion that the determination of a spouse’s annual income under section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.
(2) Where a spouse has incurred a non-recurring capital or business investment loss, the court may, if it is of the opinion that the determination of the spouse’s annual income under section 16 would not provide the fairest determination of the annual income, choose not to apply sections 6 and 7 of Schedule III, and adjust the amount of the loss, including related expenses and carrying charges and interest expenses, to arrive at such amount as the court considers appropriate.
[30] In Hauger v. Hauger, 2000 ABQB 423, [2000] A.J. No. 753 Coutu J. explained this principle at paragraph 26:
Most taxpayers’ income can be determined by reviewing their tax return. However, the tax return of the self-employed payor, like Mr. Hauger, may not be as conclusive since the Income Tax Act allows a variety of deductions to arrive at net income and taxable income. That “net income” may not reflect real disposable income and ability to pay support. One of the objectives of the Guidelines is to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation. If the payor’s children remained part of the payor’s household they would have the advantage of and would benefit from that disposable income and not just the payor’s taxable income. The drafters of the Guidelines recognized this.
[31] In addition to the methods set out in sections 16 and 17 for determining income, section 19 provides that a court may impute income:
- (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstance 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;
(b) the spouse is exempt from paying federal or provincial income tax;
(c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;
(e) the spouse’s property is not reasonably utilized to generate income;
(f) the spouse has failed to provide income information when under a legal obligation to do so;
(g) the spouse unreasonably deducts expenses from income;
(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
(2) For the purpose of paragraph (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act.
[32] In Hauger v. Hauger, supra, Coutu J. considered the implications of subsection 19(1)(g), that is, if it is alleged, as it is in the case before me, that the payor “unreasonably deducts expenses from income.” At para. 29, Coutu J. said:
When s.19 speaks to the unreasonable deduction of expenses from income it does not require establishing that the spouse has acted improperly or outside the norm in deducting expenses. Section 19(2) explicitly recognizes that reasonableness is not governed solely by whether the deduction is permitted under the Income Tax Act. The deduction may be quite proper insofar as tax policy is concerned. The issue is whether or not the full deduction of expenses which may be permitted by the Income Tax Act, result in a fair recognition of the actual income that is available to that spouse from that source of income. The objective in determining income for the purposes of the Guidelines is to determine the monies available to a payor from the sources of income in the T1 General for the support of the payor’s children. The payor’s disposable income can be considerably more than his taxable income. If the payor’s children remained part of the payor’s household they would have the advantage of and would benefit from that disposable income and not just the payor’s taxable income. (Wilson v. Wilson (1998), 196 Sask. R. 241 (Q.B.) (paras. 34-38)).
[33] With respect to the jurisdiction of the court to impute income, in a leading and recent case in the Ontario Court of Appeal, Riel v. Holland 2003 3433 (ON CA), (2003), 42 R.F.L. (5th) 120, 2003 CarswellOnt 3828, MacPherson J.A. wrote for the court (at para 36):
...The wording of s. 19 of the Guidelines is open-ended (“which circumstances include”), thus indicating that the categories listed in that section are merely examples of situation in which income may be imputed. There are, therefore, other potential scenarios in which income can, and should, be imputed. Where significant amounts of untaxed business income are used for payment of personal expenses, ‘grossing up’ business income to place a spouse’s real income on par with what it would be in a salary income is, in my view, another such scenario....
[34] With respect to the burden of proof in a case involving the imputing of income, the burden is generally on the party asserting the request. While subsection 19(g) of the Child Support Guidelines permits the court to impute income to a person who has included deductions in the calculation of his or her taxes which are established to be unreasonable deductions, such a finding can only be based on evidence presented to the court. In Bekkers v. Bekkers 2008 864 (ON SC), (2008), 49 R.F.L. (6th) 119, 2008 CarswellOnt 173, R.J. Smith J. confirmed that the burden in such cases is on the party claiming that the business deduction was unreasonable within the context of child support calculation. Although that case involved income from a corporation controlled by the spouse paying child support, the principle is applicable to the case before me.
[35] At para. 25, Smith J. said:
I find that the party alleging that a benefit has been paid to or on behalf of a spouse by a corporation, controlled by the spouse, which is not included in the definition of Total Income on the payor’s T1 income tax return, such as an improperly claimed expense, has the onus to present evidence to demonstrate that such a benefit was paid for by the company, the value of such benefit, and that the expense claimed was unreasonable. Only after the moving party establishes that a salary or benefit has been paid ... does the onus shift to the [non-claiming party] to demonstrate that the payments were reasonable in the circumstances.
[36] While the Guidelines provide in section 10 that either a payor or recipient of child support may make a claim to increase or lower the amount of Guidelines support to be paid by way of application for undue hardship, no such application is before me and I have, therefore, not considered those provisions.
[78] There are two very important concepts that were addressed by Mr. McCrae when considering what pre-tax income might be available to the owners of a corporation. The first is the need for capital if the business was capital intensive and the second is the need to stay within the banking covenants you have with the bank that is financing the company operations.
Piercing the Corporate Veil
[79] The Ontario Court of Appeal, in Wildman v. Wildman, 2006 33540 (ON CA), [2006] OJ No 3966; 82 OR (3d) 401 dealt with the issue of piercing the corporate veil in relation to assessing income for support purposes in family law matters. Justice MacPherson J.A stated at para. 38:
[38] It is clear form this passage that a company need not have been created with an improper purpose in mind to justify piercing the corporate veil; it is sufficient that the corporation is used for an improper purpose. In a matrimonial context, what this must mean is that the snapshot of the company at the time of incorporation is probably nothing more than a starting point. The real focus must be on the relationship between the company and the controlling spouse and how the spouse is using the corporation after the parties have separated and before the financial issues are resolved.
[80] In the case before me, 155 Co., the company that operated the Lintec Label business, was incorporated with Wendy being the only shareholder. Wendy and Phillip hid behind that corporate veil and insisted on the legal and titled ownership of that corporation until the start of this trial. At the outset of the trial, for the first time, they both agreed that they would accept the expert opinion of Mr. McCrae. He stated that the way to approach this was to combine all of the print and label income expenses and assets and then consider giving Phillip 50 percent of the income. The Lintec Group was and is controlled and operated by both Phillip and Wendy and should be looked at by combining all of their income, expenses, assets, and liabilities. I find that 155 Co. is a joint venture of Phillip and Wendy. A declaration that Phillip is a 50 percent owner of 155 Co. shall issue. Martin v Sansome 2014 ONCA 14. From that starting point a 50 percent division of the pre-tax income between the two of them is the fairest way to arrive at the income available to Phillip for support.
[81] The child and spousal support guidelines describe a process that will better achieve a determination of income that the fairest and most reasonable approach that would allow the children to share in the income of their parents. I find that approach taken by Mr. McCrae to be the fairest and most reasonable way to proceed with the determination of income.
Accepted Opinions from the Expert Accountants
[82] Mr. McCrae considered that the business of print and label had significant capital requirements attached to it. Substantial equipment had been purchased in order to be competitive in a changing market and there needed to be constant revision and updating to that equipment. This is one factor that would require keeping cash in the company.
[83] In addition, the Lintec Group was off covenant due to excessive drawings of the owners in the last couple of years. The bank did not call them on this breach as of yet due to the fact that they keep cash in the company. Mr. McCrae stated that that another factor that a bank would consider in not calling in loans due to a breach of covenant is the fact that the business had substantial growth in the past couple of years. In 2012, revenue was approximately $4,377,000. In 2013, it had grown to just under $5,000,000. The expectation of sustained healthy growth is a factor in allowing some leverage with the covenants.
[84] Mr. McCrae weighed all of the essential factors as noted above; the sustained growth; the present breach of the banking covenants; the requirements to stay within the banking covenants and the need to leave money to manage capital requirements. He opined that the ability to take further money out of the business is very restricted. I agree with Mr. McCrae. Ms. Minelli’s opinion that Phillip could take out all of the pre-tax income in the company does not reflect a reasoned consideration of the above noted factors. That would effectively strip the company of cash, place the company in jeopardy with the bank, and not allow the company to keep pace in a very competitive market.
[85] I do not find that it is necessary to make findings on all of the multiple disputed accounting between the companies and the individuals. By combining the operations as Mr. McCrae did, many of the disputed entries and treatment of sales and transfers between companies are eliminated. I find that Mr. McCrae adopted an approach to the assessment of available income for Phillip that was the most reasonable. He made adjustments as set out in his schedules that were fair and not far reaching as opposed to many of the adjustments taken by Ms. Minelli. I accept the reasoned adjustments applied by Mr. McCrae.
[86] I find that the available income for support is as set out by Mr. McCrae as follows:
2005 - $172,000.00
2006 - $162,000.00
2007 - $107,000.00
2008 - $140,000.00
2009 - $133,000.00
2010 - $ 98,000.00
2011 - $106,000.00
2012 - $162,000.00
Spousal Support
The Law and Analysis
[87] The Husband’s assertion that he has paid long enough, and certainly longer than the SSAGs suggest he should, implicitly asks the court to impose a cut-off date, notwithstanding demonstrable continuing need and irrespective of any compensatory element of the support that I find Lynne is entitled to. Phillip questions why he ought to be fixed with an indeterminate obligation to pay support for a marriage that lasted only 10 years. He suggests that he should be allowed to get on with life and that Lynne has had 15 years since separation in order to get on her with her life.
[88] Those same questions were posed by Mr. Bracklow in Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 SCR 420. The response by McLachlin J. (as she then was) is found at para. 57:
[57] Again the answer is that under the statutes, the desirability of freedom to move on to new relationships is merely one of several objectives that might guide the judge. Since all the objectives must be balanced, it often will not be possible to satisfy one absolutely. The respondent in effect seeks a judicially created "statute of limitations" on marriage. The Court has no power to impose such a limitation, nor should it. It would inject a rigidity into the system that Parliament and the legislatures have rejected. Marriage, while it may not prove to be "till death do us part", is a serious commitment not to be undertaken lightly. It involves the potential for lifelong obligation. There are no magical cut-off dates.
[89] The Ontario Court of Appeal in Racco v. Racco, 2014 ONCA 330 outlined the balancing of objectives and factors that a court must consider in determining spousal support commencing at para 21:
[21] The issues in this appeal must be considered in the context of the statutory and jurisprudential framework for spousal support.
[22] The Divorce Act R.S.C 1985, c.3 (2nd Supp.), provides that an order for support should recognize, among other things, the advantages and disadvantages arising from the marriage or its breakdown and relieve any economic hardship of the spouses arising from the breakdown of the marriage. The objectives are set out in section 15.2(6):
An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should
(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
[23] The Supreme Court of Canada has directed that these four objectives must be considered together in establishing an equitable sharing of the economic consequences of marriage breakdown. The courts have been repeatedly urged to not concentrate on one factor to the exclusion of the others. The factors are cumulative, not alternative.
[24] In Moge v. Moge, 1992 25 (SCC), [1992] 3 S.C.R. 813, the court established the compensatory model of support. This was followed by Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420, which formally recognized compensatory, non-compensatory, and contractual entitlements to support. Generally speaking, compensatory support focuses on the advantages and disadvantages flowing from the marriage or its breakdown, while non-compensatory support focuses on need.
[25] The application of these principles makes the determination of spousal support highly individual and discretionary. As Professors Rogerson and Thompson state in their introduction to the Spousal Support Advisory Guidelines (Ottawa: Department of Justice, 2008) (SSAG):
Bracklow emphasized the highly discretionary, individualized nature of spousal support decisions. The Court was clear that the Divorce Act endorses no single theory of spousal support and must retain flexibility to allow judges to respond appropriately to the diverse forms that marital relationships can take. The Court presented spousal support determinations as first and foremost exercises of discretion by trial judges who were required to “balance” the multiple support objectives and factors under the Divorce Act and apply them in the context of the facts of particular cases.
[90] Lynne’s contributions to Phillip’s career must be measured by the role that she played in the marriage. She delayed any career objectives to care for twins and by the time of separation, that childcare included their youngest child born just a few months before separation.
[91] Lynne also contributed to Phillip’s ability to move forward with his print business by the fact that she paid off all of the family debt with her lottery winnings. This freed up Phillip’s ability to borrow for the print business. I agree with that assertion.
[92] After separation, Lynne was paid the same salary that she was paid out of the print business until the parties entered into their separation agreement in 2002. Phillip then paid both child and spousal support according to that agreement until 2005. Phillip then decided that he had paid enough. Not only did he stop paying support, he misled the Ontario Court of Justice about his true available income. As a result, Lynne’s financial situation started to decline. She was now receiving lower child support and no spousal support. She started to use her assets to attempt to keep up her standard of living and that of the children. She also had to use her assets and incur debt in order to navigate the maze created by Phillip and Wendy in order to lower Phillips obligations to pay support.
[93] I find it most significant that Lynne took on the extraordinary role of almost sole responsibility for the children after separation. Lynne and Phillip’s children developed ever increasing needs after separation. Their challenges were substantial and it was Lynne who was left to meet the challenges the children had. Her ability to move forward in her career was restricted by both the roles she played during the marriage and the impact of the marriage breakdown on her and the children. I find that under these circumstances she is entitled to spousal support on both a compensatory and needs basis. No time limit can be placed on the support in such circumstances.
Retroactive Support
[94] Lynne did not delay in her efforts to seek support. Her efforts were blocked by the unreasonable behavior of Phillip by creating the fiction of separation of income with his new wife. I have considered the factors that I must as set out by the Supreme Court of Canada in DBS v SRG; LJW v TAR; Henry v Henry; Hiemstra v Hiemstra, 2006 SCC 37, [2006] 2 SCR 231. Having regard to those factors, I am of the view that retroactive child and spousal support is appropriate commencing in January 2006. As a result of my findings with respect to Phillip’s income, I calculate the support as follows:
Phillips Monthly Income
Lynne's Monthly Income
Spousal Support
Child Support
2006
$13,500
$4,136
$920
$2,760
2007
$8,917
$2,909
$0
$1,949
2008
$11,667
4,262
$471
$2,432
2009
$11,083
$5,171
$0
$2,328
2010
$8,167
4,637
$0
$1,794
2011
$8,833
$3,651
$0
$1,920
2012
$13,500
$3,580
$1,267
$2,784
2013
$12,208
$5,056
$606
$2,560
2014
$11,792
$3,833
$1,063
$2485
[95] I have used the low end of the SSAGs in order to arrive at a quantum of support that would reflect both compensatory spousal support and a fair quantum of needs based support as well as fair sharing of incomes for these children.
[96] The amount of support on a go forward basis is based on imputed income to Phillip and Lynne based on the 2014 figures of $11,792 per month for Phillip and $3,833 per month for Lynne.
[97] As a result, Phillip shall pay spousal support based on annual income of $141,500. Spousal support commencing January 1, 2015, is set at the amount of $1,063 per month and Child Support in the amount of $2,485 per month.
[97] The retroactive support is calculated from January 1, 2006 to December 31, 2014 to be a total of $316,044. Phillip has paid since January 2006 the sum of $155,722. His support arrears shall be fixed at $160,322. It was Lynne who shouldered the burden of providing for her and the children over an extensive period of time while Phillip chose to misrepresent and not represent what his true income was. Lynne incurred debt and depleted income as a direct result of Phillip’s deceptions. The arrears shall be paid within 3 months of the release of these reasons.
[98] Phillip and Wendy shall provide to Lynne no later than August 1st in each year, financial statements of their print and label business operations. The statements shall set out all of the information of the combined income and expenses of the print and label businesses in accordance with the same approach set out by Mr. Robert McCrae as accepted by me in these reasons.
[99] If the parties are unable to agree on costs they may provide brief written submissions to me of no more than 3 pages in length together with a bill of costs within 30 days of the release of these reasons. Submissions are to be delivered to the Trial Coordinator in Brantford. If no submissions are made the Court will consider the cost issue resolved.
HARPER, J.
Released: June 17, 2015
CITATION: Wakeley v. Wakeley, 2015 ONSC 3561
COURT FILE NO.: FS-10-23
DATE: 2015/06/17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
LYNNE THERESA WAKELEY
Applicant
- and -
PHILLIP ROSS WAKELEY
Respondent
REASONS FOR JUDGMENT
HARPER, J.
Released: June 17, 2015