Refusal To Pay Spousal Support Lands Man Behind Bars

Written on behalf of Arbesman Hamilton LLP

In July 2017, while getting ready to board a bus to take him to jail, the husband in a divorce case told the National Post, “There’s no way that in a divorce case I should end up in jail.” While it may be uncommon for parties in a divorce to end up in jail, the refusal of the husband in this case to pay $10 million to his former wife led to just that.

A Marriage That Began Happily

The husband and wife were high school sweethearts who were married in 1971. The husband’s career started with him working for a department store, and later a toy company that produced a line of costumes. When he realized he would not be made partner of the company, he and his wife started Seasons, designing and selling Halloween costumes, which were made in China.

While the couple had to pinch pennies early on, their business was eventually extremely successful. The couple owned a nice home, a cottage, expensive cars, and travelled frequently. However, the business meant the husband often had to travel overseas. In 2004, after dropping the husband off at the airport, the wife got suspicious of a comment the husband made about being out of touch for several days. After returning home she opened their phone bill and discovered a series of calls from the Philippines, a country in which their company did no business. The wife waited until it would be midday in the Philippines to call the number. When she did, she was surprised to hear a woman answer the phone and say the husband was there.

A Discovery of Deceit

The phone call marked the discovery of what turned out to be an extraordinary series of affairs. The husband had three fiancées overseas, including one with whom he started a family. He had made attempts to bring two of these women to Canada, lying to the government that his wife was dead in one application, and that he was never married in another.

This led to the couple’s divorce hearing, but the husband’s pattern of deception did not end there. Despite being the wealthy owner of a successful business, the husband claimed an income of just $48,000 on his tax return. Through a lengthy investigation, the court was shown evidence of a web of offshore corporations and strategies used to hide income, including what the husband described as a “brotherhood of trust” in which he and business partners helped shield money from their spouses by moving it through companies and banks. In addition to hiding money, he had also given close to $1 million to his various girlfriends, with the “brotherhood of trust” sometimes delivering money on his behalf.

At Trial

The couple’s actions, which had racked up $2 million in legal fees between the couple, were eventually rolled into a single trial. The court pointed to the husband’s lengthy history of deception in both family life and business before determining the wife was entitled to a lump sum support payment of $5,985,216 based on the husband’s imputed annual income of $1.4 million. She was also awarded $2,573,807 in compensation for her interest in the business and $1.4 million in costs. However, the wife only received about $500,000, as well as on-again off-again monthly payments of that money before the husband declared bankruptcy after admitting to Revenue Canada that he had been underpaying his taxes.

The courts did not believe the husband’s claims of financial trouble and found him in contempt of court after ignoring several orders to make payments to his former wife. He was eventually ordered to serve six months in jail, but refused to make payments when his sentence was up, meaning he could end up behind bars once more.

At Arbesman Hamilton LLP, we encourage our family law clients to follow our pragmatic approach to separation, divorce and spousal support by looking at the big picture and focusing on their goals and what is important to them. Contact us online or by phone at 416-481-5604 if you are going through a separation or are considering one.