Most people work to live, not vice versa, and it is that truism — or more precisely, the intersection of employment law with family law and personal lives — which supplies this issue’s topics.
The big-news case considers a really hot topic: how the collapse of a marriage affects the share-options pot of gold for employees of high-tech companies. An Ontario court has ruled that the options cannot be counted as income in calculating child-support payments.
The case concerns Robert Washburn, a vice-president with the spectacularly successful high-tech company, Nortel Networks. Washburn was paying his former wife, Wendi Arnold, $3,000 monthly for the support of their three children, including a daughter who turned down job offers to take postgraduate studies in Europe.
Washburn paid that child’s $25,000 tuition. He could afford it because, beyond the profits on his stock options, he earned $377,000 per year in salary, bonus and investments. But when Arnold got wind of Washburn’s stock options, she wanted a piece of the action by way of child support.
In 1993, Washburn had exercised some of his stock options and sold the shares, making $385,048 before taxes. In 1999, he really hit the jackpot on his options, earning $3,181,315 pre-tax. And he still had rights on more options.
Arnold claimed that, under federal child-support guidelines, Washburn’s earnings on his options should be averaged into his annual income. She also claimed that his entitlement to future shares should be factored in.
Q Aren’t stock options properly part of your taxable income, and therefore relevant to child-support calculations?
A Justice Douglas Rutherford of the Ontario Superior Court has rejected Arnold’s argument. The share profits did not form a pattern of regular income, Justice Rutherford has ruled. “These large elements of [Washburn’s] wealth have come into his hands in relatively recent years and this is not one of those cases in which the children may now be deprived of a high-end lifestyle which they enjoyed before the divorce.
“The children have always been more than adequately supported, and their lifestyle has not only not deteriorated in any way, but is supported by both parents, well beyond what might be said to be their minimum legal obligation.”
Regarding Arnold’s request that Washburn’s possible future option profits be factored into his income for child-support calculation, Justice Rutherford has demurred.
“I appreciate that...the support guidelines give the court discretion to impute income to a person whose property is not ‘reasonably utilized to generate income,’ but I am not inclined to resort to that provision here because there has not been shown any reasonable requirement for the respondent to put more of his property to use generating income.
“[Washburn] appears to live modestly given his wealth and there is adequate income to properly support the children as it is.”
For more information: Arnold v. Washburn, Ontario Superior Court file no. 88FL3387, Sept. 14/00.
The second case concerns job transfers. They are stressful for everyone, of course, and it is often good policy for the employer to do its best to make the transfer smoother for families of valued employees. But as this recent lawsuit shows, you need to be especially careful not to make promises you cannot keep.
Paul Manders had retired from Petro-Canada, but his wife, Nicole, still worked there. After Paul’s retirement, Petro-Canada informed Nicole that, as part of a proposed joint venture with Ultramar, Petro-Canada intended to move her job from Western Canada to Ontario. As Paul Manders was still doing contract work, Nicole asked if there would be a job for him.
Petro-Canada tried hard to accommodate the family. John Quinn, a Petro-Canada executive, eventually offered Paul a six-month contract. However, in his e-mail offering the job to Manders, Quinn specifically noted that the offer was “subject to the successful implementation of the joint venture.”
Then things began to fall apart. Most significantly, the federal Competition Bureau refused to approve the joint venture. However, Petro-Canada still intended to move Nicole’s job to Oakville, Ont., and the company was unable to find work for Paul.
He sued for breach of contract and negligent misrepresentation, claiming that Petro-Canada’s promise of a job in Ontario amounted to a binding contract.
Q Was the promise to find Paul Manders a job a binding agreement?
A The Ontario Superior Court has dismissed Manders’ lawsuit. The court has found that all of the parties involved understood that the offer of a job to Manders was subject to approval of the joint venture by the Competition Bureau.
Petro-Canada acted at all times in a commercially reasonable manner, the court has said, and the company did not mislead Manders about the situation. Although the parties believed that the Competition Bureau’s approval was likely, they were aware that it was not a sure thing.
The lesson remains: If what you are promising is conditional on the happening of certain events, specify those conditions clearly and make sure that the employee (or the potential employee) understands that the offer is conditional.
For more information: Manders v. Petro-Canada, Ontario Superior Court of Justice file 141/99, June 20/00.
Jeffrey Miller is editor of Canadian Employment Law Today. For subscription information, call (416) 609-3800 or (800) 387-5164.
The big-news case considers a really hot topic: how the collapse of a marriage affects the share-options pot of gold for employees of high-tech companies. An Ontario court has ruled that the options cannot be counted as income in calculating child-support payments.
The case concerns Robert Washburn, a vice-president with the spectacularly successful high-tech company, Nortel Networks. Washburn was paying his former wife, Wendi Arnold, $3,000 monthly for the support of their three children, including a daughter who turned down job offers to take postgraduate studies in Europe.
Washburn paid that child’s $25,000 tuition. He could afford it because, beyond the profits on his stock options, he earned $377,000 per year in salary, bonus and investments. But when Arnold got wind of Washburn’s stock options, she wanted a piece of the action by way of child support.
In 1993, Washburn had exercised some of his stock options and sold the shares, making $385,048 before taxes. In 1999, he really hit the jackpot on his options, earning $3,181,315 pre-tax. And he still had rights on more options.
Arnold claimed that, under federal child-support guidelines, Washburn’s earnings on his options should be averaged into his annual income. She also claimed that his entitlement to future shares should be factored in.
Q Aren’t stock options properly part of your taxable income, and therefore relevant to child-support calculations?
A Justice Douglas Rutherford of the Ontario Superior Court has rejected Arnold’s argument. The share profits did not form a pattern of regular income, Justice Rutherford has ruled. “These large elements of [Washburn’s] wealth have come into his hands in relatively recent years and this is not one of those cases in which the children may now be deprived of a high-end lifestyle which they enjoyed before the divorce.
“The children have always been more than adequately supported, and their lifestyle has not only not deteriorated in any way, but is supported by both parents, well beyond what might be said to be their minimum legal obligation.”
Regarding Arnold’s request that Washburn’s possible future option profits be factored into his income for child-support calculation, Justice Rutherford has demurred.
“I appreciate that...the support guidelines give the court discretion to impute income to a person whose property is not ‘reasonably utilized to generate income,’ but I am not inclined to resort to that provision here because there has not been shown any reasonable requirement for the respondent to put more of his property to use generating income.
“[Washburn] appears to live modestly given his wealth and there is adequate income to properly support the children as it is.”
For more information: Arnold v. Washburn, Ontario Superior Court file no. 88FL3387, Sept. 14/00.
The second case concerns job transfers. They are stressful for everyone, of course, and it is often good policy for the employer to do its best to make the transfer smoother for families of valued employees. But as this recent lawsuit shows, you need to be especially careful not to make promises you cannot keep.
Paul Manders had retired from Petro-Canada, but his wife, Nicole, still worked there. After Paul’s retirement, Petro-Canada informed Nicole that, as part of a proposed joint venture with Ultramar, Petro-Canada intended to move her job from Western Canada to Ontario. As Paul Manders was still doing contract work, Nicole asked if there would be a job for him.
Petro-Canada tried hard to accommodate the family. John Quinn, a Petro-Canada executive, eventually offered Paul a six-month contract. However, in his e-mail offering the job to Manders, Quinn specifically noted that the offer was “subject to the successful implementation of the joint venture.”
Then things began to fall apart. Most significantly, the federal Competition Bureau refused to approve the joint venture. However, Petro-Canada still intended to move Nicole’s job to Oakville, Ont., and the company was unable to find work for Paul.
He sued for breach of contract and negligent misrepresentation, claiming that Petro-Canada’s promise of a job in Ontario amounted to a binding contract.
Q Was the promise to find Paul Manders a job a binding agreement?
A The Ontario Superior Court has dismissed Manders’ lawsuit. The court has found that all of the parties involved understood that the offer of a job to Manders was subject to approval of the joint venture by the Competition Bureau.
Petro-Canada acted at all times in a commercially reasonable manner, the court has said, and the company did not mislead Manders about the situation. Although the parties believed that the Competition Bureau’s approval was likely, they were aware that it was not a sure thing.
The lesson remains: If what you are promising is conditional on the happening of certain events, specify those conditions clearly and make sure that the employee (or the potential employee) understands that the offer is conditional.
For more information: Manders v. Petro-Canada, Ontario Superior Court of Justice file 141/99, June 20/00.
Jeffrey Miller is editor of Canadian Employment Law Today. For subscription information, call (416) 609-3800 or (800) 387-5164.
