ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS-13-1769-00
DATE: 2015-09-04
B E T W E E N:
LINDA DICKSON
Jane A. Connon, for the Applicant
Applicant
- and -
JAMES WRIGHT
S. Whitzman, agent for William Fanjoy, for the Respondent
Respondent
HEARD: July 3, 2015,
at Brampton, Ontario
Price J.
Reasons For Order
NATURE OF MOTION
“Knowledge itself is power.”
Sir Francis Bacon, Meditationes Sacrae (1597)
[1] It is essential that the court, to preserve the integrity of its decision-making in the resolution of marital disputes, preserve the balance of power between the spouses by not permitting one or the other to use their greater control of information, particularly concerning their respective incomes, to incapacitate the other from participating effectively in the proceeding that is to determine the support that one owes the other.
[2] James Wright claims that in the two years since he separated from Linda Dickson following their 30 year common law relationship, he has experienced a substantial decline in the income he derives from Wright Instruments, a company that he controls. This makes it impossible, he says, for him to continue paying the expenses associated with the home that he and Ms. Dickson shared up until their separation and which Ms. Dickson, who is undergoing treatment for cancer and has experienced a decline in her own income, has been occupying since. Mr. Wright additionally claims that he is unable to afford a professional valuation of his shares in his business, which the court ordered him to obtain and produce two years ago.
[3] Ms. Dickson, who is 59 years old and has been employed by Mr. Wright’s company for 45 years, has not noticed any decline in the company’s business and is skeptical of Mr. Wright’s assertion that the company has experienced financial difficulties. She moves for an order requiring Mr. Wright to pay her temporary spousal support. The court must determine whether the amount of support that Mr. Wright pays to her should be based on the income he has earned from his company in the past or on the income that he reports he is earning now.
BACKGROUND FACTS
[4] James Wright (“Mr. Wright”) and Linda Dickson (“Ms. Dickson”) were in a common law relationship for 30 years until their separation on May 31, 2012.
[5] Mr. Wright is the controlling shareholder of Wright Instruments Limited, a closely-held corporation that his father established and that Mr. Wright now controls, which repairs and overhauls aircraft instruments. Mr. Wright reports that his income from the business, which was $407,947 in 2012, declined to $323,729 in 2013, and to $150,381 in 2014. He calculates his current income to be only $38,600, and says that he has been forced to seek creditor protection for the company because of its financial difficulties.
[6] Ms. Dickson, who is 59 years old, has been employed by Wright Instruments Limited for 45 years, beginning as a receptionist when the company was owned by Mr. Wright’s father. She is now the company’s Contract Administrator, Customer Service Representative (for, among other customers, the company’s principal customer, Honeywell, which manufactures aircraft instruments for the Department of Defence), and its Shipping Manager. Ms. Dickson says that she has not noticed any decline in the company’s business, and she is skeptical of Mr. Wright’s assertion that the company has experienced financial difficulties.
[7] Ms. Dickson, who has been undergoing treatment for cancer, has seen a decline in her income as a result of her medical leaves of absence. She says that she has had to withdraw almost all of her R.R.S.P. savings in order to make ends meet. Her total income in 2014 was $72,233, including her R.R.S.P. withdrawals.
[8] At a case conference on August 13, 2013, this court ordered that Mr. Wright forthwith retain a chartered business valuator, to be selected by both parties, to value his shares in Wright Instruments. Within 40 days, he was to provide particulars of the value of his assets and liabilities as of January 1982 and May 31, 2012. The business valuation was to be done in three stages, of (1) calculation; (2) estimate; and (3) formal report. The initial cost was capped at $20,000, and nothing in the order was to commit Mr. Wright, without further direction from the court, to stages 2 and 3 of the valuation, and the costs associated with them.
[9] The parties agreed to suspend the business valuation while they attempted mediation, but the mediation was unsuccessful. Ms. Dickson now wants Mr. Wright to have his business valuation completed and, additionally, to have his income valued by a chartered income valuator. Mr. Wright says that he is financially unable to do this. He says that he also cannot afford to continue paying the expenses associated with the home that he and Ms. Dickson shared up until their separation and that she has since occupied.
[10] Mr. Wright has substantial assets, including the home where he currently resides, which is worth approximately $1,000,000, the parties former conjugal home, which is worth approximately $350,000 (subject to a mortgage of approximately half that amount), and R.R.S.P.s having a value of approximately $600,000. However, he states that he owes substantial amounts to the Canada Revenue Agency, which has a charge against these assets.
[11] Ms. Dickson says that she is unable to maintain her current residence at the former conjugal home without continued help from Mr. Wright, who has been paying the expenses associated with the home since the parties separated. Ms. Dickson asks the court to order Mr. Wright to continue paying these expenses, at least until he finishes making financial disclosure.
ISSUES
[12] The principal issue to be determined by the court is whether, pending complete financial disclosure by Mr. Wright, he should be required to pay spousal support based on his past income, or whether his support obligation should be based on what he says is his reduced income owing to his company’s recent business difficulties.
PARTIES’ POSITIONS
[13] Ms. Dickson submits that she is entitled to continued support based on Mr. Wright’s past income, on the grounds of her need for support and Mr. Wright’s presumptive ability to pay, based on his past income. Mr. Wright submits that he has demonstrated his current inability to pay spousal support by the financial disclosure he has made to this point and the fact that his company is seeking bankruptcy protection.
ANALYSIS AND EVIDENCE
a) Ms. Dickson’s entitlement to spousal support
[14] Ms. Dickson’s entitlement to spousal support is derived from s. 30 of the Family Law Act. It provides:
- Every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so.[^1]
[15] Ms. Dickson is a spouse within the meaning of the Family Law Act. Section 29 in Part III of the Act, dealing with support obligations, provides:
- In this Part,
“spouse” means a spouse as defined in subsection 1(1) and in addition includes either of two persons who are not married to each other and have cohabited,
(a) Continuously for a period of not less than three years, or
(b) In a relationship of some permanence, if they are the natural or adoptive parents of a child. [Emphasis added.]
[16] Ms. Dickson and Mr. Wright lived together in a conjugal relationship for 30 years, from 1982 until May 31, 2012. Ms. Wright is therefore entitled to spousal support from Mr. Wright to the extent of her need and Mr. Wright’s ability to pay.
b) Mr. Wright’s income
[17] Sections 15 to 19 of the Federal Child Support Guidelines direct the court to proceed sequentially through four methods of determining a spouse’s income for purposes of child support until it finds the one that is the most fair.[^2] It has been held that the methodology set out in section 15 to 19 apply equally to the determination of income for purposes of spousal support.[^3]
[18] The four methods set out in section 15 to 19 are as follows:
a) If the parties agree on the amount, the court accepts that amount;
b) If the parties do not agree, the court applies the spouse’s total income (Line 150) from the spouse’s Notice of Assessment from the Canada Revenue Agency for the most recent year for which tax information is available.
c) If a spouse’s income has fluctuated significantly, the court averages his Line 150 income in the Notices of Assessment for the past three years for which income tax information is available.
[19] The last year for which income information is available is 2014. Mr. Wright’s Line 150 income that year was $150,381.
[20] Mr. Wright’s Line 150 income in recent years has been as follows:
a) $144,907 in 2009
b) $356,970 in 2010
c) $292,026 in 2011
d) $407,947 in 2012
e) $323,729 in 2013
f) $150,381 in 2014
[21] Based on the foregoing data, I find that Mr. Wright’s income has fluctuated significantly. His average Line 150 income in the past 3 years (2012 to 2014) was $294,019 ($407,947 + $323,729 + $150,381 = $882,057) ÷ 3 = $294,019.
[22] Mr. Wright asserts that averaging his total income in the past three years would not be the fairest way of determining his income for the purpose of support because his income fell substantially from 2013 to 2014 (from $323,729 to $150,381) owing to the failing fortunes of his company, and he now calculates his income to be only $38,600.04. I reject this argument for the following reasons.
[23] Mr. Wright has not made financial full disclosure. On August 13, 2013, he was ordered to provide a valuation of his business from a chartered business valuator. He has not done so. He has asserted that he has sought bankruptcy protection for his company but has not produced the documentation. He has not complied fully with the undertakings given at his examination on January 31 and February 18, 2014. In particular, he has not provided the information regarding the advertisements he has posted for a replacement technician, or a copy of his shareholder loan account. He has delivered an amended financial statement, sworn on June 24, 2015, but has not agreed to a date when he will attend to be cross-examined on this statement.
[24] I draw an adverse inference from Mr. Wright’s failure to provide full disclosure. While it is fair to average his income over the past three years, to take account of the substantial drop in his income from 2013 to 2014, it would be unfair to Ms. Dickson to reject the average of his Line 150 income for the past three years in favour of the income he asserts to be his present income, which is less than half the income he has reported to the Canada Revenue Agency for any of the past six years, while he has failed to produce the full financial disclosure necessary to substantiate his reduced current income.
[25] Mr. Wright’s presumptive income, based on method three as set out in the Child Support Guidelines, should prevail until he establishes that this would not be the fairest method, for reasons analogous to those set out in s. 19 of the Guidelines, after giving Ms. Dickson full financial disclosure, thereby enabling her to respond fully to his position. Mr. Wright has been ordered to produce a business valuation and has failed to do so. In the circumstances, he needs to produce a valuation of his income from a qualified income valuator in order to rebut the presumption of his income based on the average of his Line 150 income over the past three years for which he filed income tax return.
c) Ms. Dickson’s income
[26] Ms. Dickson’s total (Line 150) income for the past three years has been as follows:
a) $95,783: 2012
b) $67,242: 2013
c) $72,233: 2014
[27] While Ms. Dickson’s income has fluctuated significantly, this is attributable to the fact that her employment income has declined by reason of medical leaves of absence for cancer, for which she is continuing to receive treatment. She was diagnosed in February 2014 with advanced colon cancer. She is recovering from three major surgeries and is still dealing with the side effects of chemotherapy. I find that the decline in Ms. Dickson’s employment income is likely to continue indefinitely.
[28] Ms. Dickson’s employment income of $72,233 consisted of employment income of $47,233.96 from Wright Instruments and $25,000 from her R.R.S.P. As the R.R.S.P. withdrawals were not, in fact, retirement income, but were withdrawn for emergency purposes, as a result of the parties’ separation and inadequate spousal support being paid by Mr. Wright, they should not be included in her income.[^4]
[29] Ms. Dickson devoted herself to Mr. Wright and his business beyond the extent that one would expect from an ordinary employee. She worked nights and weekends so that the corporation could meet the demands of its customers, comply with regulations, and have adequate monthly cash flow.
[30] During the parties’ cohabitation, Ms. Dickson contributed nearly all of her earnings to the household and the parties’ mutual living expenses, contributing only a small amount to her R.R.S.P. She did most of the housekeeping, cooking, cleaning, gardening, and basic maintenance at the common residence. She helped Mr. Wright care for his aunt, Lena Cunningham, providing cleaning, cooking, shopping, gardening, and companionship to her. Mr. Wright and Ms. Dickson stayed with her most weekends and holidays for 20 years, and Mr. Wright inherited the majority of his Aunt Lena’s estate.
[31] It is clear that Ms. Dickson invested time and effort into her relationship with Mr. Wright from which Mr. Wright benefitted. I find that Mr. Wright was enriched more than Ms. Dickson from her efforts, and disproportionately to the benefit she derived from their relationship, and that she is entitled to spousal support from Mr. Wright on compensatory grounds.
[32] Mr. Wright and Ms. Dickson enjoyed a high standard of living together, dining out almost daily, sometimes twice daily, at expensive restaurants, spending $2,000 per month or more on meals out. Ms. Dickson bought new clothing whenever she wanted and had her hair and nails done every week. Mr. Wright and Ms. Dickson took vacations whenever they were both able to leave Wright Instruments. Ms. Dickson left work early on Tuesdays and Thursdays and Mr. Wright paid for her to work out with her personal trainer on those days. From 1990 to 2000, Mr. Wright and Ms. Dickson spent the month of January in Florida each year. In 2002, they bought a time share together which they planned to use for holiday purposes during their retirement.
[33] Following the parties’ separation, Ms. Dickson was left with no assets. Their conjugal home is in Mr. Wright’s name. Since Ms. Dickson has undergone her cancer treatments, Mr. Wright has withheld her pay and delayed paying the carrying costs of the home where she lives. He did not pay the Enbridge gas bill in May and her gas was cut off on the Victoria Day weekend for 5 days. The cable was almost disconnected due to overdue bills. Caledon Hydro has notified her that the electricity bills are unpaid and that she will soon have no lights or air conditioning.
[34] Ms. Dickson has no security or pension other than Canada Pension, and has used up most of her R.R.S.P.’s to supplement her income. I find that she was prejudiced by her relationship with Mr. Wright and by their separation.
d) The amount of support payable
[35] The parties did not provide a DivorceMate calculation of Ms. Dickson’s entitlement to spousal support based on the average of Mr. Wright’s income over the past three years. Ms. Dickson tendered a Support Mate calculation based on Mr. Wright’s employment income of $149,999 and his taxable Canadian dividends in the amount of $171,272 and the interest of $2,457 from his other investment income, and Ms. Dickson’s employment income in the amount of $63,382. This produced amounts of spousal support, according to the “Without Child Support” formula as applied by the DivorceMate program, from a low amount of $7,872 to a high amount of $10,496, with a mid-point of $9,184.
[36] Based on my own DivorceMate calculation, taking Mr. Wright’s income at his 3 year average of $294,019 and Ms. Dickson’s 2014 income of $47,233.96, Mr. Wright’s support obligation ranges from a low of $7,712 to a high of $10,261 with a mid-point of $8,997.
[37] Taking Mr. Wright’s income based on his Line 150 income of $150,381 in 2014, and Ms. Dickson’s income of $47,233.96 for the same year, Mr. Wright’s spousal support obligation would range from a low of $3,223 to a high of $4,277, with a mid-point of $3,761.
[38] In his financial statement dated June 24, 2015, Mr. Wright reports annual expenses of $169,190.16. However, it is apparent that he has deducted substantial personal expenses from his income by charging them to Wright Instruments Ltd. For example, he indicated in his questioning on January 31, 2014, that he operates a 2011 Frontier automobile that is owned by Wright Instruments (Q. 137 to 140), as well as a 1997 Subaru that he owns, the expenses of which are paid by the company and applied to Mr. Wright’s draw account (Q. 142 to 148). The company pays the insurance on these vehicles.
[39] Additionally, Mr. Wright owns a 1987 B.M.W., a 1982 Datsun, and a 1973 Porsche, the expenses for which he pays through the company.
[40] Most of Mr. Wright’s expenses for meals out are charged as client promotion (Q. 173 to 180).
[41] Mr. Wright has been paying all the carrying costs and expenses of the former conjugal home at 218 Victoria Street as follows:
a) $843.75: Two CIBC Lines of Credit, secured against the Victoria Street Property, one having a limit of $150,000 and the other having a limit of $10,000, on which approximately $156,000 has been drawn, on which interest only is payable, at the rate of 6.75%, or = $10,125 per year of $843.75 per month;
b) $177.49 Property taxes;
c) $208.33 Property insurance;
d) $108.33 Lawn cutting/snow and salt;
e) $303.90 Water;
f) $114.03 Water heater rental;
g) $113.05 Electricity
h) $266.21 Cable and internet (Rogers)
$2,135.08 TOTAL
[42] Mr. Wright has been paying the additional amount of $300 to $400 per month for Ms. Dickson to have the use of a Nissan Murano.
[43] The combination of the expenses for the house and the car have therefore amounted to approximately $2,500 per month.
[44] In her financial statement sworn June 10, 2015, Ms. Dickson claims expenses of $6,060.74, apart from those which Mr. Wright pays, associated with her home and car. I have reviewed these expenses and find them, on the whole, to be reasonable, other than $1,200 per month which she claims for alcohol and tobacco. They include no amounts for vacations, only $100 per month for entertainment and recreation, and a relatively modest $50 per month for gifts.
[45] Based on the foregoing, Ms. Dickson’s total monthly expenses amount to approximately $8,560.74. This is slightly less than the $8,997 amount which is the mid-point of Mr. Wright’s spousal support obligation, based on his three year average income and Ms. Dickson’s most recent employment income. I find this to be an appropriate amount of temporary spousal support based on the limited financial information currently available from the parties.
CONCLUSION AND ORDER
[46] For the foregoing reasons, it is ordered that:
The respondent, James Wright, shall pay temporary spousal support to Ms. Dickson in the amount of $8,500 per month, beginning June 1, 2015, being the month when Ms. Dickson filed her motion.
Ms. Dickson shall be responsible, beginning June 1, 2015, for paying the costs of the property municipally known as 218 Victoria Street, Bolton, Ontario, including property taxes, property insurance, repairs and maintenance, water, heat electricity, telephone, cable, and internet, and she shall be responsible for expenses associated with the Nissan Murano which the applicant has been driving, including gas, oil, insurance, license and repairs.
Mr. Wright shall forthwith provide the following financial disclosure to Ms. Dickson:
(a) All information and documents in his possession pertaining to advertisements for a technician;
(b) All pages of his shareholder loan account, and any documents pertaining to that loan;
(c) Whether the bill for Ms. Dickson’s neck brace was submitted to Mr. Wright’s medical benefits insurer, and the documents pertaining to the claim;
Additionally, Mr. Wright shall forthwith obtain and produce the valuation of his interest in Wright Instruments Ltd. from a Chartered Business Valuator and shall, additionally, retain a Chartered Income Valuator to obtain a valuation of his income since January 1, 2012, to the present, and provide proof to Ms. Dickson’s counsel that he has done so. He shall bear the cost of the valuation, subject to re-apportionment by the trial judge.
If he has not done so already, Mr. Wright shall attend forthwith at the offices of Discovery Transcript Services, 10 Kingsbridge Garden Circle, Suite 502, Mississauga, to answer questions arising from his answers to questions asked on January 31 and February 18, 2014, and to be questioned on his financial statement sworn June 24, 2015.
Ms. Dickson shall forthwith produce to Mr. Wright all monthly statements from all credit cards and bank accounts she has operated from the date of her last production to the present.
Ms. Dickson’s counsel shall remove Mr. Epstein’s letter from tab 9(c) of the continuing record.
Unless the Support Order and Support Deduction Order are withdrawn from the Office of the Director of the Family Responsibility Office, the Support Order shall be enforced by the Director, and amounts owing under the Support Order shall be paid to the Director, who shall pay them to the party to whom they are owed.
Price J.
Released: September 4, 2015
COURT FILE NO.: FS-13-1769-00
DATE: 2015-09-04
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
LINDA DICKSON
Applicant
- and –
JAMES WRIGHT
Respondent
REASONS FOR ORDER
Price J.
Released: September 4, 2015
[^1]: Family Law Act, R.S.O. 1990, c. F.3, as amended.
[^2]: Federal Child Support Guidelines, SOR/97-175, as am.
[^3]: Rilli v. Rilli, [2006] O.J. No. 2142; Pellerin v. Pellerin, 2009 ONSC 60671; Boston v. Boston, 2001 SCC 43, [2001] 2 S.C.R. 413 at para. 66.
[^4]: McConnell v. McConnell, 2015 ONSC 2243 at paras. 92-109.