[Indexed as: Bertrim v. Bertrim]
DELBERT RUSSELL BERTRIM (Applicant / Appellant) and ELEANOR LOUISE BERTRIM (Respondent)
Ontario Superior Court of Justice (Divisional Court) Blair R.S.J., Then, Desotti JJ.
Heard: September 29, 2003 Judgment: January 5, 2004 Docket: A-9407/01
Counsel: Leo P. Arseneau for Applicant / Appellant Nicola S. Munro for Respondent
Per curiam:
Overview
[1] This is an appeal from the Order of the Honourable Mr. Justice Del Frate dated July 3, 2002. Del Frate J. dismissed an application by Mr. Bertrim seeking the termination of his obligation to pay spousal support but varied the amount of monthly support downward from $2,341.76 to $1,650.00 per month (plus indexing), commencing July 1st, 2002.
[2] The Appellant raises three grounds of appeal, namely that in awarding support the Application Judge erred in, a) resorting to "double dipping" into the husband's pension, contrary to the principles laid down by the Supreme Court of Canada in Boston v. Boston, [200l] 2 S.C.R. 413 (S.C.C.); b) imputing income to Mr. Bertrim by making findings of fact in the absence of any evidence; and, c) failing to make the downward variation that he did order retroactive to July 1, 2001, the date of Mr. Bertrim's retirement (which triggered the material change).
[3] I would dismiss the appeal for the reasons that follow.
Facts
[4] The parties were married on August 7, 1967. They separated in December, 1993. Mrs. Bertrim commenced divorce proceedings and a divorce judgment was granted by Bernstein J. on February 8, 1996 [(February 8, 1996), Bernstein J. (Ont. S.C.J.)]. That judgment incorporated the terms of an agreement between the parties requiring that Mr. Bertrim, a) make an equalization payment to Mrs. Bertrim in the amount of $15,126.13; b) pay monthly support of $1500.00 (indexed under The Family Law Act R.S.O. 1990, c . F-3, s. 34(5)); c) assume liability for certain debts of the parties; and, d) transfer his interest in the matrimonial home to Mrs. Bertrim (who assumed responsibility for the first mortgage encumbering it).
[5] Under the terms of the agreement, as incorporated into the Divorce Judgment, each party released their interest in the other party's pension, savings and other assets, as well.
[6] Six months after the agreement and Divorce Judgment, Mr. Bertrim made a voluntary assignment in bankruptcy. He received an absolute discharge from bankruptcy on May 12, 1997. As a result, his obligation to make the equalization payment to his former wife was discharged, as was his obligation to assume liability for the various family debts and to indemnify Mrs. Bertrim if she suffered any losses with respect to those debts. Mrs. Bertrim was one of the major creditors in the bankruptcy.
[7] When Mr. Bertrim made his voluntary assignment in bankruptcy, Mrs. Bertrim applied to vary the support provisions of the divorce judgment on the grounds that the bankruptcy constituted a material change in circumstances (i.e., that Mr. Bertrim would be relieved of other obligations and would have more ability to make support payments). She succeeded. On October 25, 1996, Justice Meehan ordered an increase in monthly payments to $2,200, indexed [(October 25, 1996), Meehan J. (Ont. S.C.J.)]. With indexing the payments were $2,341.76 per month at the time of the order under appeal. In his reasons Meehan J. said:
I am satisfied that the bankruptcy and her failure to obtain the capital proceeds are a material change in the circumstances. My view is that she should receive maintenance of $2200.00 per month which would reflect the current financial situation as well as the loss of capital payments, and that because of the circumstances this payment should be secured by the husband's pension .
[8] At the time of the separation, the divorce proceedings, and the bankruptcy, Mr. Bertrim was an employee of Inco in Sudbury. He had an annual income from employment of $70,800 and a total income of $77,084. Mrs. Bertrim was, and continues to be, employed at Wal Mart. She earns approximately $23,000 per year.
[9] One of the major assets taken into account in settling the equalization of net family property between Mr. and Mrs. Bertrim was Mr. Bertrim's pension at Inco. The parties had valuations of that pension prior to the divorce settlement, based on three scenarios: on the assumption that Mr. Bertrim would retire at the earliest possible date, namely at the age of 53.15 years after 30 years of service, the estimated value was $93,557; if he were to retire at the age of 55, it was $77,703; finally, if he retired at age 65, the pension was estimated to have a value of $31,482. All of the value of the pension had accrued during the marriage.
[10] On July 1St, 2001, Mr. Bertrim retired after 30 years of employment. He was 53.15 years old and retired on the earliest possible date. There are no reasons given in the record for his retirement. As a result of this change, however, his income from employment was reduced to annual pension benefits in the amount of $36,000. In addition, he receives Workers Compensation benefits of $4,800 and rental income of $3,300 yearly, for a total annual income of $44,100.
[11] Following the divorce, Mr. Bertrim remarried. He lives with his second spouse and their 3-year old daughter. The present spouse is employed as a claims administrator at Inco. She earns approximately $60,000 per year.
[12] Del Frate J. found "from reviewing the financial information filed that since the date of the separation, Mr. Bertrim has faired much better financially than Mrs. Bertrim" and that Mr. Bertrim had "acquired several properties, one being a rental property and the other one being waterfront property in Alban, Ontario". On the other hand, "Mrs. Bertrim was forced to sell the matrimonial home following the bankruptcy of her husband" and to acquire "a smaller home on which she is making mortgage payments of some $762 monthly". Justice Del Frate found on the facts that Mr. Bertrim's "present family enjoys a much higher standard of living than [Mrs. Bertrim]".
Analysis
The "Double Dipping" Issue
[13] The relief claimed before Del Frate J. was not a downward variation in support payments but rather the termination of the Appellant's obligation to pay spousal support altogether. Mr. Arseneau advises that during argument he indicated to the Application Judge that, in the alternative, Mr. Bertrim would be prepared to pay some decreased amount of support, but an amount considerably less than that settled in the order under appeal. It is clear from a reading of the judge's reasons, however, that the thrust of the argument — and the major consideration in the decision — was the submission that Mr. Bertrim should be relieved from making any support payments on the basis of the "double dipping" principle enunciated in Boston v. Boston, supra.
[14] In Boston, the Supreme Court of Canada held that it is "generally unfair to allow the payee spouse to reap the benefit of the pension both as an asset and then again as a source of income, especially where a capital asset was received and it is retained to increase the estate" (Major J., at para. 63). The rationale for this conclusion was explained by Major J., on behalf of the majority, in the following passages (paragraphs 2 and 3):
Pension rights give rise to special difficulties in questions of spousal support. Under the Ontario Family Law Act, R.S.O. 1990, c. F.3, a pension right must be valued as a capital asset that is an entitlement to a future income stream. After retirement, the pension changes from a capital asset into an income asset. When the pension is in pay, in a sense, the pension asset is being liquidated. When a pension changes from an asset into income the "double recovery" difficulty can arise, usually in the following way. On marriage dissolution, the parties equalize the matrimonial assets. The pension-holding spouse (the husband in this appeal) must include the future right to his pension as part of his net family property. For the husband to retain his pension, the payee spouse (the wife in this appeal) must get other assets of the same value, in order to equalize their net family property. While the husband is still employed he may be obliged to make spousal payments to the wife. When he retires, however, and his pension comes into pay, the wife is said to be making a double recovery if she continues to receive spousal support from the husband's pension income, as she received assets equal to the capital value of the pension at the time of settlement. If support payments from the pension are maintained, she is collecting twice from the same source.
[15] Boston recognized, however, that there could be exceptions to this general principle. At paragraph 65, Major J. said:
Despite these general rules, double recovery cannot always be avoided. In certain circumstances, a pension which has previously been equalized can also be viewed as a maintenance asset. Double recovery may be permitted where the payor spouse has the ability to pay, where the payee spouse has made a reasonable effort to use the equalized assets in an income-producing way and, despite this, an economic hardship from the marriage or its breakdown persists. Double recovery may also be permitted in spousal support orders/agreements based mainly on need as opposed to compensation, which is not the case in this appeal.
[16] This exception was recognized and applied by the Ontario Court of Appeal in Meiklejohn v. Meiklejohn, [2001] O.J. No. 3911 (Ont. C.A.).
[17] Del Frate J. applied the foregoing criteria and concluded, on the facts before him, that the general rule against double dipping did not apply in this case to preclude Mrs. Bertrim from receiving continued spousal support, notwithstanding Mr. Bertrim's retirement and notwithstanding that the bulk of his income is now derived from his pension. In my view it was not only reasonable, but also correct, for him to have come to that conclusion on this record.
[18] I start with the observation that the spousal support order in this case appears to be based on need, as opposed to compensation.
[19] Secondly, Mr. Bertrim has the ability to pay continuing spousal support, even if no additional income is imputed to him following his retirement. His current living arrangements cannot be ignored. With his new spouse, he lives in a family, with one dependent, that has an annual income of $104,000. Mrs. Bertrim lives in a $23,000 per year income family with no dependents. As the Application Judge noted, Mr. Bertrim has been able to acquire several properties, including a rental property and a waterfront recreational property, whereas his former wife has been unable to carry the matrimonial home and has had to acquire a smaller home with carrying costs of $762 monthly. The record supports the finding that Mr. Bertrim's "present family enjoys a much higher standard of living" than Mrs. Bertrim does (Reasons, paragraph 11).
[20] Thirdly, no one has suggested that Mrs. Bertrim has not been responsible with her finances. Although the $15,126.13 equalization payment was a lump sum amount, it was not to be paid in a lump sum but rather in monthly payments of $300 pursuant to the Divorce Judgment — designed, no doubt, to provide her with cash to carry the first mortgage on the matrimonial home that she assumed. The bankruptcy discharged this payment. Moreover, even if one accepts that the support payments of $2200 per month ordered by Meehan J were devised in part to recoup the lost equalization payments — which I am inclined to do, although the Application Judge was not — the equalization of net family property between Mr. and Mrs. Bertrim did not provide much of "a capital asset... retained to increase [Mrs. Bertrim's] estate", as contemplated by Major J. in Boston. Nor, because of its periodic nature, did it provide an asset base that Mrs. Bertrim could use to "generate income from the assets that she received on equalization" (Boston, paragraph 58), as she might otherwise have been obliged to do. Meehan J. recognized this as well, noting that "[Mrs. Bertrim] has some economic hardship as a result of the breakdown of the marriage and she has not gained a total self-sufficiency despite her conscientious efforts". In short, she has made reasonable efforts to use her assets as best she could — the second criteria for application of the Boston exception.
[21] Finally, the record supports the conclusion that Mrs. Bertrim continues to experience economic hardship from the marriage or its breakdown, the last criteria. Mr. Bertrim's pattern of resistance and arrears, in truth, simply reinforces that situation.
The Support Amount
[22] Having properly found that the double dipping principle did not operate to relieve Mr. Bertrim of his support obligations in the circumstances, Del Frate J. could simply have dismissed the application, since the termination of spousal support obligations was all that was requested in the Notice of Application. He decided to go further, however, and to rule in favour of Mr. Bertrim by finding his retirement constituted a material change in circumstances and by reducing the monthly payments called for under the Order of Meehan J. from $2,341.76 to $1,650 (indexed). Mr. Bertrim contends, however, that this approximate 30% decrease in support is insufficient, and that the Application Judge erred in this regard.
[23] I do not accept this submission.
[24] The decision of a judge of first instance with respect to spousal support is entitled to considerable deference. As L'Heureux-Dubé J. noted for the Court in Hickey v. Hickey, [1999] 2 S.C.R. 518 (S.C.C.), at paragraph 11 (albeit in the context of a decision at trial):
Our Court has often emphasized the rule that appeal courts should not overturn support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the award is clearly wrong.
[25] The foregoing statement was adopted by Major J. in Boston, supra (at paragraph 72), where what was at issue was an application to vary a support order. Consequently, the same principles apply in the case at bar.
[26] Mr. Arseneau argued that the Application Judge erred in principle (a) by finding that he should order Mr. Bertrim to pay his former wife support in an amount sufficient to make their incomes approximately equal, and (b) by imputing an income to Mr. Bertrim based on his conclusion that "there are no medical or any other reasons for [Mr. Bertrim] not to work other than that he wants to be on pension"(Reasons, paragraph 20).
[27] As to the first of these points, the Application Judge said, at paragraph 19 of his Reasons:
The parties have chosen not to lead evidence on the tax consequences of these payments. It is obvious, however, that if I were to grant the Applicant's request, Mrs. Bertrim's lifestyle would be dramatically altered. With the payments that the husband had been making to date, their incomes would be approximately equal. By reducing the husband's payment to nothing, then there would be a serious disparity between their incomes. [emphasis added]
[28] I do not read this as an attempt by the Application Judge to equalize the respective incomes of the parties, but merely as an observation regarding what the situation actually was when payments were made pursuant to the Order of Meehan J., coupled with the self-evident conclusion that if he were to accede to the Applicant's request and eliminate support payments altogether there would be a very serious disparity between their incomes. I note that by reducing the support payments by about 30%, the Application Judge tilted the proportionate incomes in Mr. Bertrim's favour. There is no merit to this submission, in my view.
[29] The question of imputing income to Mr. Bertrim raises the one issue of concern on this appeal. Although he did not impute any specific income to the Appellant, the Application Judge does seem to have been of the view that some additional income could be imputed to Mr. Bertrim because of his "ability to work" (Reasons, paragraph 25) and because there were "no medical or other reasons" advanced "for him not to work other than that he wants to be on pension" (paragraph 20). As the Application Judge noted, the parties did not lead any evidence as to the tax consequences of various support payments being made and there were no "divorce mate" or other such calculations provided to him. Mr. Arseneau sought to introduce "divorce mate" evidence on the appeal. We declined to accept that evidence on the basis that it could properly have been placed before the Applications Judge but was not.
[30] The legitimacy of Mr. Bertrim's early retirement was an issue before the Application Judge and on this appeal. Indeed, whether the equalization payment agreed to before Justice Bernstein in 1996 had been premised on the highest value of Mr. Bertrim's pension — and therefore on the tacit agreement that he could retire at the earliest opportunity — became the subject of a lively debate between counsel before this panel.
[31] Mr. Arseneau argued the application before Del Frate J. had proceeded on the premise that the parties had agreed on the higher valuation for purposes of establishing the equalization payment. Therefore, since Mrs. Bertrim had received the benefit of the highest possible valuation of her husband's asset, for purposes of settlement — based on the premise of early retirement — she cannot now complain that Mr. Bertrim had exercised that right, and it was unfair for the Application Judge to impute additional income to him on the basis that he should not have retired early because he still had obligations and the ability to work. Mr. Arseneau says the first time he knew there was any issue over this question was during the course of the hearing before this panel.
[32] Ms Munro, on the other hand, denies this. She states that there was no understanding at the time the divorce judgment was issued that Mr. Bertrim would retire at 53 and that the highest pension valuation was not used as the basis for calculating the settlement equalization payment; it was arrived at through compromise. She argues here — as she did before Del Frate J. — that Mr. Bertrim chose to retire at the earliest date, as Mrs. Bertrim says in her affidavit, knowing he had a support obligation to her and other obligations to his new family as well; that he did so following a pattern of conduct designed to try to defeat his former wife's interests (including a build-up of arrears, non-payment of costs, and, finally, retirement); that Mr. Bertrim had the financial obligation and the ability to earn income and that he could not simply choose to take early retirement and thus jeopardize Mrs. Bertrim's position.
[33] The problem is that there is no evidence in the record as to whether the maximum estimated value of Mr. Bertrim's pension, or some other value, was utilized by the parties in arriving at their settlement of the equalization payment. The panel cannot resolve the dispute between counsel in the absence of evidence. The onus is on Mr. Bertrim, as the Applicant, to put forward a basis to establish and explain the material change in circumstances relied upon.
[34] Justice Del Frate was clearly aware of Mr. Arseneau's position, as he alluded to it specifically in paragraph 12 of his Reasons. A fair reading of his Reasons indicates that he was alive as well to the concerns of Ms Munro about Mrs. Bertrim's needs, the relative positions of the parties, and the dramatic impact that permitting Mr. Bertrim to cease making any support payments because of his retirement would have on his former wife.
[35] I do not accept the submission that the reference by Meehan J. to Mr. Bertrim having "a pension value of $93,856" is of any assistance in resolving this issue. Justice Meehan was not asked to, nor did he purport to, opine on the question whether the parties had settled their equalization payment based on that value of the pension.
[36] It is significant, in my view, that Mr. Bertrim, himself, did not say in his supporting affidavit that the agreement respecting the equalization payment was based upon the highest valuation of the pension and upon the premise that he would retire at the earliest opportunity. He says simply (affidavit, paragraph 16):
The value of my pension was calculated and formed part of the equalization payment of $15,126.13, as per paragraph 1 of the Divorce Judgment. Annexed hereto and marked Exhibit "I" is a copy of the Pension Valuation.
[37] The pension valuation alluded to is the one setting out the three possible scenarios, and three different estimated valuations, referred to earlier in these Reasons. Had there truly been an agreement between Mr. and Mrs. Bertrim that their assets were being equalized on the basis of the highest valuation of the husband's pension and that he would be free to retire at the age of 53 (only about 5 years after the settlement) with the consequent result that support payments would be terminated or at least substantially reduced, I would have expected to see this pivotal piece of evidence clearly stated in Mr. Bertrim's evidence. It is not.
[38] That being the case, and given the onus on the Applicant, it was open to the Application Judge not to accept Mr. Arseneau's position and to conclude — there being "no medical or any reasons" put forward "for him not to work" — that Mr. Bertrim had the ability to continue to work and that some indeterminate but notional additional income should be imputed to him in assessing the appropriate downward variation in support payments to be made. The Application Judge made no error in principle in doing so, in my view.
[39] Nor can it be said that the Application Judge "significantly misapprehended the evidence" or that his award of reduced support payments in the amount of $1,650 monthly is "clearly wrong". He took into account all of the relevant indicia of the parties' respective needs and means on the evidence before him. He balanced those factors. He found there had been a material change in circumstances and that a significant downward adjustment in spousal support was warranted. Having regard to all of the circumstances, his conclusion that an award in an amount similar to that agreed to by the parties in the settlement before Justice Bernstein (indexed up to $1,650 per month) was not unreasonable, and I would not interfere with it.
Retroactivity
[40] Mr. Arseneau also submitted that Del Frate J. erred in failing to make the downward variation in support retroactive to the date of Mr. Bertrim's retirement, namely, July 1, 2001.
[41] The Application Judge did not give reasons for arriving at his determination that the variation would he effective July 1, 2002 (two days before the release of his decision). When a variation order is to become effective is a matter within the discretion of the Application Judge, however. There was ample basis in the record to justify not making the variation retroactive to the date of retirement, in the circumstances of this case, including the fact that there were existing arrears and the application had been delayed in coming on for hearing. I would not interfere with the exercise of discretion by Del Frate J. in this regard.
Disposition
[42] The appeal is therefore dismissed.
[43] The Respondent is entitled to her costs of the appeal. Given the time expended in argument concerning the unresolved differences between counsel on the pension valuation point, however, we fix those costs at $2,000, payable within 30 days of the release of these Reasons.
Appeal dismissed.