CITATION: Dean v. Dean, 2016 ONSC 4298

DIVISIONAL COURT FILE NO.: 154/16 DATE: 20160630

ONTARIO SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

A.C.J.S.C. MARROCCO, C. HORKINS AND M. VARPIO JJ.

BETWEEN:

JAMES EDWARD DEAN

Applicant/Respondent

– and –

VESNA DEAN

Respondent/Appellant

Iain D.D. Snedden, for the Applicant /Respondent

Kenneth Peacocke and Michelle Kropp, for the Appellant

HEARD at Toronto: May 20 2016

C. hORKINS J.

introduction

1Vesna Dean (“the appellant”) and James Edward Dean (“the respondent”) were married in 1993. There are no children of the marriage. They separated on September 25, 2006.

2On December 1, 2009, the parties resolved all of their issues and consented to the final order of Harper J. (“the final order”). The final order equalized their property and ordered the respondent to pay the appellant monthly spousal support of $1,500 for an unlimited period of time. The appellant is seriously disabled and unable to work.

3On October 9, 2013, the respondent served a motion to change the final spousal support order. He sought a decrease in spousal support owing to the appellant based on what he characterized as a material change in circumstances.

4The motion to change the final order proceeded before Gorman J. (“the motion judge”) in January 2015. The respondent argued that there were four material changes to his circumstances: his adoption of his partner’s three children; his partner’s inability to work because of one child’s medical needs; the deterioration of his own health and the adoption of a deceased friend’s child. As a result of these changes, the respondent argued that he could not meet his financial obligations without a reduction in the spousal support.

5The motion judge found that a material change in the respondent’s circumstances had occurred. As a result, the motion judge ordered a reduction in the monthly spousal support owing to the appellant from $1,500 to $782 from November 1, 2013 to January 1, 2015 and $843 commencing February 1, 2015 (“the variation order”). The appellant was ordered to pay the respondent $20,000 for costs of the motion (“the costs order”).

6The appellant appeals both orders. Leave is requested to appeal the costs order.

7For the reasons given, the appeal is allowed and the final order is restored.

background facts

8The following facts provide the context for this appeal.

9The appellant is 45-years-old. Since 1993 she has suffered from a variety of serious chronic medical problems. The appellant has been diagnosed with Systemic Lupus (Erythematosus), Lupus Cerebritis and Lupus Vasculitis. She also suffers from renal impairment, anemia, anxiety, depression and panic disorders. When her kidneys started to fail, she was placed on large doses of Prednisone which caused a necrosis of both hips. Her fibulas were removed, and she had to use a wheelchair and then a walker. She had a possible stroke in 2013 and is being investigated for neurological disorders.

10The appellant’s medical problems seriously impact her lifestyle. She is unable to work and has been on long-term disability since April 1997.

11During the marriage, the respondent was employed full-time as a police officer with the London City Police Service. With the agreement of the appellant, the respondent decided to apply to law school in 2005. He wanted to have a career that he could pursue after retiring from the police force at age 51. The respondent applied, and at the age of 35 he started law school in September 2006 at the University of Western Ontario.

12The parties separated on September 25, 2006. From that point forward, the respondent lived with his current wife, Katie, and her three children. When the final order was agreed to, they were engaged to be married.

13The final order equalized the property. The respondent transferred his share of the condominium that they owned, to the appellant and paid her a further sum of $4,450. He was ordered to pay past spousal support of $4,450 and $1,500 a month going forward. The appellant continued to live in the condominium and assumed responsibility for the mortgage on the property.

Adoption of the Children

14Approximately three months after the final order, the respondent agreed to adopt Katie’s three children and assume financial responsibility for them. This arose as a result of one brief telephone call around February 14, 2010 between Katie and her ex-husband, Joe, who is the father of the three children.

15According to Katie, the conversation went as follows. Joe told her that he wanted the respondent to adopt the children. He wanted the children to “become [the respondent’s]” as if he and Katie had never been married. He said that he was done and was not paying anymore child support. He also told her he would fight her in court if she did not agree. Katie described the call as a “pretty short conversation”. She believed that her ex-husband would follow through with his threat to stop paying support. She thought he would continue to create conflict for her and the children, as he had done in the past. She described their history as “full of conflict and abuse”.

16Joe had never previously raised the issue of adoption with Katie. After the call, he sent Katie texts nagging her about the adoption and the paper work. This was the extent of the contact between Katie and Joe concerning the adoption request.

17Despite the conflict that Joe had caused in the past, he was paying $1,456 in monthly child support. There was no evidence that he was in default.

18Before this telephone call, the respondent and Katie had never considered the idea that the respondent might adopt Katie’s children. As the respondent explained, the children “had a father, as difficult as he was, they had a father”.

19To deal with the adoption request, Katie and the respondent sought advice from a child psychologist. By the end of February or early March 2010, Katie and the respondent had decided that the respondent would adopt the three children. The adoption was finalized on June 17, 2010, and Joe stopped paying child support.

20When the respondent was asked if he considered the financial impact of losing the father’s child support payments, the respondent stated that the adoption “wasn’t a financial choice. It was a choice about the kids and about our relationship, my commitment to Katie.” They did not discuss how they were going to make up the loss of the monthly child support. Regarding the “financial end of things”, the respondent stated, “we would just have to deal with it”.

21While the respondent said that they would have to deal with the financial consequences of adopting the children, there was no evidence that they had a viable plan to carry the increased costs of the children. Instead, the respondent and Katie made decisions that increased their costs further.

22Once the decision was made to adopt the children, the respondent and Katie decided to get married. They were married on July 9, 2010. The respondent borrowed $25,255 from his family for the wedding. The respondent and Katie also decided to buy a new, larger home.

23Before the adoption and their marriage, the family lived in a house that Katie owned. The respondent shared the house-related costs with Katie (mortgage, taxes, utilities, etc.). He paid for his own personal expenses and did not contribute to the expenses of Katie and the children.

24In March 2010, the respondent and Katie jointly purchased a home. They decided to combine their incomes and expenses, and as the respondent explained, “everything became joint”. The respondent testified that the housing expenses increased with the purchase of the new home. The respondent and Katie also took two vacations, and they upgraded the family vehicles.

25In April 2014, the respondent and Katie assumed care of a child whose father had died. The child was a friend of the family and had no one to look after him after his father’s sudden death. The respondent and Katie obtained a court order giving them custody of the child. They are in the process of adopting the child. The family receives about $200 a month from a death benefit. There was no money in the father’s estate.

The Respondent’s Employment

26The respondent completed his first year of law school over a two-year period while he worked full-time as a police officer. For the last two years of law school, the respondent was a full-time student and worked full-time as a police officer.

27The respondent graduated from law school in April 2010 and successfully wrote his bar admission exams that spring. He could not find a paid articling position. The respondent continued to work as a police officer. In February 2011, he started an unpaid articling position with Mr. Cudmore and took parental leave from the police force. At this point, he decided to start practicing law rather than waiting until his retirement from the police force.

28The respondent was called to the bar in September 2011, and he started to work as a lawyer in October 2011. The respondent did not resign from the police force until February 2012.

29As a lawyer, the respondent has two sources of income. He works in association with Mr. Cudmore and earns about $80,000 per year. Mr. Cudmore pays him a regular bi-weekly amount. They practice criminal law. The respondent does not pay for the office space and services that he uses when working with Mr. Cudmore.

30As well, the respondent does some estates and wills work on his own. He does this work at home where he set up an office in the basement. He has no significant expenses. He has no employees except for Katie who helps with the estates and wills practice. She markets the practice and looks for clients, schedules appointments, liaises with clients, witnesses documents, keeps the files intact and generally helps run the wills and estates practice at home. Katie is paid about $2,000 a year for this work.

31Mr. Cudmore pays the respondent’s LawPRO insurance and his Law Society dues. The respondent contributes about $250 to LawPRO each year.

32The combined income from the two sources is the same income that the respondent earned before he left the police force.

The Respondent’s Health

33In December 2009 when the final support order was signed, the respondent described his health as “overall good”. He saw a chiropractor occasionally if he did any strenuous activity. He had just been diagnosed with diabetes and was controlling it with diet.

34During late 2010 and through his articling in 2011, the respondent testified that he was experiencing the following health concerns. The respondent described “severe pain issues”. He fractured his neck when he was 14-years-old. While he always had issues with his neck, the pain increased in late 2010. The respondent did not explain the pre-existing issues he had with his neck. When the pain increased, he took “narcotic pain killers”. The respondent also experienced high blood pressure and high cholesterol that he managed with medication. He was previously diagnosed with type-2 diabetes, and it was under control. In 2010, he required insulin to control the diabetes. The respondent also started seeing a psychiatrist for anxiety.

35The respondent testified that his problems were worse when policing because of sitting in a cruiser and fighting with people who were arrested. These health concerns were alleviated with the articling schedule. For this reason, he decided to start practicing law after articling rather than wait until his retirement from the police force.

36Since the summer of 2011, the respondent has been able to stabilize the high blood pressure, cholesterol and anxiety with medication. Sometimes he feels extreme fatigue because of the diabetes. He sees his doctor regularly to monitor the use of insulin. He does his best to get through the work day, but cannot always work a full day. He cannot work a 70 to 80 hour work week, which he expects many lawyers work.

37The respondent did not produce any corroborating evidence to support his medical problems.

Katie’s Inability to Work

38As of December 2009, Katie had been working part-time at TD Canada Trust and earned about $24,000 a year. In May 2012, Katie took an unpaid leave of absence from the bank. Her eight-year-old daughter had been diagnosed with numerous mental health issues. Her daughter’s problems started to surface in 2009 and grew worse with time. By 2012, working outside the home became impossible because the school frequently called Katie to report that they were unable to control the child.

39Katie testified that she has not been able to return to work because of her daughter’s needs. At some point in 2013, the child was identified by the government as 100 percent disabled. There was no evidence about government benefits that might be available for this child and her needs.

40Katie resigned from the bank so that she can deal with her daughter’s needs. In 2015, Katie was taking online courses at Ryerson University in Fundraising Management and helping the respondent with his wills and estates practice.

The Appellant’s Circumstances

41The respondent acknowledged the appellant’s medical problems at the start of the motion. These medical problems existed during the marriage and continue today.

42At the time of separation, the parties lived in a wheelchair accessible ground floor condominium. It was bought to accommodate the appellant’s condition. It has a bedroom, den and an unfinished basement. The appellant continues to live in this condominium and lives alone.

43The appellant lives a frugal lifestyle. She had to cut back on basic expenses such as food when the respondent failed to pay spousal support. When the motion to vary was heard in 2015, the respondent owed the appellant $8,800 in spousal support arrears.

44The appellant’s January 23, 2015 financial statement confirms yearly expenses totaling $43,721.76. This exceeds her monthly income that consists of $936.34 (CPP), $917 (Sun Life Pension) and $1,500 spousal support.

45The condominium is valued at $270,000. The appellant has a mortgage (“line of credit”) that she pays monthly. The line of credit allows her to pay what she can. The appellant owed $223,000 on the line of credit at the time of the motion. She testified that a reduction in spousal support would have an impact on her. She has no “plan B” to fall back on. She has considered moving, but given the line of credit and the selling fees, she would be left in a negative position. The appellant does not want to move because her home provides her with a safe place to live. The appellant is often sick. Her neighbours watch out for her and will check on her if they have not seen her outside.

Overview of motion judge’s Decision

46The motion judge correctly stated that s. 17 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) governs a motion to vary a support order. She then reviewed the principles of law as stated in L.M.P. v. L.S., 2011 SCC 64 (“LMP”) as follows:

30 In our view, the proper approach under s. 17 to the variation of existing orders is found in Willick v. Willick, 1994 28 (SCC), [1994] 3 S.C.R. 670, and G. (L.) v. B. (G.), 1995 65 (SCC), [1995] 3 S.C.R. 370. Like the order at issue in this case, Willick (dealing with child support) and G. (L.) (dealing with spousal support) involved court orders which had incorporated provisions of separation agreements. Both cases were decided under s. 17(4) of the Divorce Act, the predecessor provision to s. 17(4.1).

31 Willick described the proper analysis as requiring a court to "determine first, whether the conditions for variation exist and if they do exist what variation of the existing order ought to be made in light of the change in circumstances" (p. 688). In determining whether the conditions for variation exist, the court must be satisfied that there has been a change of circumstance since the making of the prior order or variation. The onus is on the party seeking a variation to establish such a change.

32 That "change of circumstances", the majority of the Court concluded in Willick, had to be a "material" one, meaning a change that"if known at the time, would likely have resulted in different terms" (p. 688). G. (L.) confirmed that this threshold also applied to spousal support variations.

33 The focus of the analysis is on the prior order and the circumstances in which it was made. Willick clarifies that a court ought not to consider the correctness of that order, nor is it to be departed from lightly (p. 687). The test is whether any given change "would likely have resulted in different terms" to the order. It is presumed that the judge who granted the initial order knew and applied the law, and that, accordingly, the prior support order met the objectives set out in s. 15.2(6). In this way, the Willick approach to variation applications requires appropriate deference to the terms of the prior order, whether or not that order incorporates an agreement.

34 The decisions in Willick and G. (L.) also make it clear that what amounts to a material change will depend on the actual circumstances of the parties at the time of the order.

35 In general, a material change must have some degree of continuity, and not merely be a temporary set of circumstances (see Marinangeli v. Marinangeli (2003), 2003 27673 (ON CA), 66 O.R. (3d) 40, at para. 49). Certain other factors can assist a court in determining whether a particular change is material. The subsequent conduct of the parties, for example, may provide indications as to whether they considered a particular change to be material (see MacPherson J.A., dissenting in part, in P. (S) v. P. (R.), 2011 ONCA 336, 332 D.L.R. (4th) 385, at paras. 54 and 63).

47The motion judge acknowledged that the respondent’s “current household income is at roughly the same level as it was at the time of the December 1, 2009 order.”

48The motion judge accepted that the appellant’s medical problems make it “quite impossible for her to work”. She stated that the final support order “recognized the [appellant’s] need for spousal support.”

49The motion judge was satisfied on the evidence that a material change in circumstances existed that was not contemplated at the time of the final order. She accepted the material changes that the respondent presented, as reviewed below.

50The motion judge accepted the respondent’s evidence that his various medical problems caused fatigue, required treatment and limited his ability to work longer hours. The respondent provided no corroborating evidence. The motion judge noted in a footnote as follows:

It is true that [the respondent] did not provide collateral medical evidence regarding his health issues, but it should be noted that the [appellant] also did not do so (in relation to her own medical condition).

51The motion judge described the adoption of the children as “entirely altruistic”. She found that the respondent “voluntarily assumed the role of parent and caregiver to children abandoned by their parents”. She was “not prepared to fault” the respondent for his actions.

52The motion judge accepted that Katie left her job at the bank to deal with her daughter’s mental health issues. When she attempted to return to work at another job, she was unable to continue because of her daughter’s needs. The motion judge described Katie’s unemployment as placing “a further strain on the household income”.

53Having accepted the material change in circumstances, the motion judge considered whether the monthly support should be varied.

54She reviewed the appellant’s sources of income (CPP, Sun Life pension and spousal support) and monthly housing expenses of $1,835 (mortgage, water and heat). She noted the appellant’s evidence that she “needs” the $1,500 in spousal support to be able to stay in her condominium.

55The motion judge noted the respondent’s position that he could not afford to pay $1,500 in spousal support without jeopardizing his ability to support Katie and the four children. The motion judge appears to have accepted this position since she allowed the variation. However, there is no analysis in the reasons of the respondent’s financial circumstances to explain why payment of the spousal support jeopardizes the respondent’s ability to support his new family. The party’s financial statements are not referred to in the reasons. The only reference in the reasons to the respondent’s financial circumstances is at para. 52:

Mr. Dean’s health has deteriorated over the years, and likely will continue to do so as he ages. The fatigue brought upon by his medical issues has made it difficult for him to take on more onerous duties, thereby thwarting his income potential. [Katie’s] inability to work has put a further strain on the household income. There is no immediate end to her child care responsibility with Rachel, and accordingly no reasonable sense of a return to work date.

56The respondent provided the court with Spousal Support Advisory Guidelines (“SSAG”) for 2009, 2013 and 2014. The motion judge referred to the SSAGs and, following Gray v. Gray, 2014 ONCA 659, she concluded that it was appropriate to rely on the SSAGs to determine the quantum of spousal support.

57The motion judge ordered a significant decrease in the $1,500 monthly spousal support payment. She relied on the SSAG for 2013 and 2014. For 2013, the SSAG was based on an income of $66,533. The motion judge accepted the mid-range spousal support of $782 (for November 1, 2013 to January 1, 2015). For 2014, the SSAG was based on an income of $70,000. The motion judge accepted the mid-range of $843 (for February 1, 2015 and onwards) with no end date.

58The reasons for ordering the decrease in spousal support are brief. The motion judge referred to s. 15.2(6)(d) of the Divorce Act and stated as follows at paras. 69-70:

Section s.15.2(6)(d) of the Divorce Act promotes the objective of economic self-sufficiency but only if it is practicable. In this case, it is unlikely that the [appellant] will ever become self-sufficient owing to her medical issues. The [appellant’s] claim for support is entirely needs-based, as she has suffered no economic disadvantage arising from the marriage.

In my view, having regard to all of the circumstances, the [appellant] must adapt her lifestyle to a decreased income. The [respondent] has demonstrated that there has been a change in circumstances sufficient to cause a decrease in spousal support.

59Finally, the motion judge ordered the appellant to pay the respondent costs of $20,000 within 30 days of the order.

standard of review

60The Supreme Court of Canada set out the standard of review applicable in appeals from judges' orders in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. On questions of law, the standard is correctness. On questions of fact, the standard is palpable and overriding error. On questions of mixed fact and law, the Court stated that there is a spectrum. Where there is an extricable legal principle, the standard of review is correctness. However, with respect to the application of the correct legal principles to the evidence, the standard is palpable and overriding error.

61This court should not overturn a support order "unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the award is clearly wrong" (Hickey v. Hickey, 1999 691 (SCC), [1999] 2 S.C.R. 518 at para. 11; Gray v. Gray at para. 22).

62Rule 61.03(7) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 requires that the appellant obtain leave to appeal the costs order. If leave is granted, this court should only set aside the costs order if the motion judge made an error in principle or if the cost order is plainly wrong (see Hamilton v Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303 at para. 27).

analysis

63The motion judge found that there was a material change in circumstances. She based this on the respondent’s adoption of the children, the deterioration of the respondent’s health and Katie’s inability to work. She found that these changes were material, not temporary and not contemplated at the time of the final order.

64For the reasons that follow, this decision was clearly wrong in law. It was based in part on no evidence and in part on a significant misapprehension of the evidence that was provided. This was a palpable and overriding error of fact. As will be explained, these errors affected the result.

The Respondent’s Health and Income

65The motion judge found that the respondent’s health “has deteriorated over the years and likely will continue to do so as he ages. The fatigue brought upon by his medical issues has made it difficult for him to take on more onerous duties, thereby thwarting his income potential” (at para. 52). She found that this was a material change.

66The finding that the respondent’s health “has deteriorated over the years and likely will continue to do so as he ages” was not supported by the evidence. The respondent did not provide any corroborating medical evidence concerning his health problems. While it is open to a judge to accept a party’s own evidence without corroborating proof, the evidence that the respondent gave did not support the motion judge’s findings of fact. It was a palpable and overriding error to make these findings of fact on the available evidence.

67The respondent did not describe deterioration of his health over the years. He testified that when he signed the final order his health was “overall good”. As of 2009, he saw a chiropractor occasionally and had some problems with his neck arising from an injury when he was 14-years-old. Very few particulars were provided. In the second and third year of law school, he also worked full-time at the police force.

68The respondent described health problems that arose in late 2010 and early 2011. He testified that since the summer of 2011 and up to the time of his testimony in January 2015, his problems have stabilized with medical care. He did not describe any further deterioration of his health. His diabetes is “under control” with insulin. Similarly, the rest of his medical problems are also “under control.”

69The evidence that was available about the respondent’s ability to work did not support the motion judge’s finding that his health made it “difficult for him to take on more onerous duties, thereby thwarting his income potential”. The respondent testified that sometimes he feels “extreme fatigue” because of the diabetes and “must rest for a half an hour or so”. He never explained how often this occurs. Despite these problems, he testified that he is “able to do my days work”.

70He explained as follows:

A. … sitting too long or standing too long causes me aggravation. … but I’m able to do my days work. … with Mr. Cudmore doing criminal law that enables me to be in the courtroom standing and sitting so it gives me some variation. Um, but by the end of the day I’m certainly typically spent.

A. Well I certainly can’t work as much as I would like to. Um, I would like to say I put in a – a 37 – 40 hour week. Um, but there are days where I – I have to take half the day or – well, last week I was in for a sentencing and the neck was just too bad in the morning, giving me a – almost a migraine, but I completed a sentencing and then just had to go home for the rest of the day … most weeks I’m able to get through each day, sometimes with a little rest in the office in the afternoon, on the lunch break from court, but outside of that there isn’t much I can do in the evening. I – I do wills out of home. … a couple of times through the week meet with a client to, sit down and draft up some will documents. … when I finish at the end of the day I typically come home and I have to take, ah, medication at that point for the pain. … I try my best to get through each day. I – I think I do pretty good.

A. … I don’t know what the future holds, but I would like to think that I’ve got it to a point where I can continue on as I am.

71While the respondent testified that he cannot work as much as he would like to, he did not specify how many additional hours he would like to work. The respondent mentioned that he cannot work the 70 to 80 hour work week that he expects many lawyers work, but he never testified that this is the number of hours that he would like to work.

72According to the evidence, the respondent works a 37 to 40 hour work week for Mr. Cudmore. There was no evidence that if he wanted to work extra hours that work was available for him to do. There was no evidence that he had ever tried to work longer hours.

73In addition to working for Mr. Cudmore, the respondent works at home doing wills and estates work. In 2015, he was earning $6,000 to 7,000 a year doing wills and estates. There was no evidence about the number of hours he spends doing this work.

74Important factual context was missing in order to properly assess the materiality of the alleged change in circumstances. How many hours a week in total was the respondent working? How many additional hours did he want to work and could not (allegedly due to his health)? Were these additional hours realistic given the job market?

75The motion judge found that the respondent’s medical issues caused fatigue “thwarting his income potential”. It was a palpable and overriding error to make this finding of fact on the record before the court. The respondent offered no evidence to show that his income potential that was “thwarted”. As of 2015, the respondent had been practicing law for about three-and-a-half years and was earning about $84,000 a year. There was no evidence that this was below the income potential for a criminal lawyer in London, Ontario in his third or fourth year of practice.

76While the motion judge acknowledged the lack of corroborating medical evidence, she seemed to excuse the absence of this evidence because, as she explained, the appellant also did not provide corroborating evidence of her disability.

77The onus is on the party seeking a variation to prove a material change in circumstances. There is no onus of proof that rests on the responding party. On a motion to vary a final order under s. 17 of the Divorce Act, the court does not consider the correctness of the order that a party seeks to vary (LMP at para. 33). The motion judge’s statement suggests some doubt as to the appellant’s disability. It reveals a misapprehension of the onus of proof and a failure to appreciate the focus of the material change analysis. As stated in LMP at para 33, “Willick clarifies that a court ought not to consider the correctness of that order, nor is it to be departed from lightly (p. 687).” The nature and degree of the appellant’s disability was long-standing and not disputed. The final order to pay the appellant $1,500 in monthly spousal support was premised on her serious disability.

78It is presumed that the judge who granted the initial order knew and applied the law and that accordingly, the prior support order met the objectives set out in s. 15.2(6). In this way, the Willick approach to variation applications requires appropriate deference to the terms of the prior order, whether or not that order incorporates an agreement.

79Not every change is material. The “sufficiency of the change in circumstances is evaluated against the backdrop of the particular facts at hand” (Willick at para. 99). A material change must have “some degree of continuity, and not merely be a temporary degree of circumstances” (LMP at para. 35).

80In summary, the motion judge made findings of fact unsupported by the evidence. The evidence that the respondent gave about his medical problems did not establish the “sufficiency” and the “degree of continuity” that is required for a material change. At best, the evidence was that his complaints increased in late 2010 and his complaints had stabilized by the summer of 2011. Since then the respondent has been working a 37 to 40 hour work week plus extra hours at home. On occasion, he is tired and may rest or leave early, but he is able to do “a day’s work”. He believes that he can continue on as he is doing.

Voluntary Changes and the First-Family-First Principle

81The motion judge erred in law when she failed to consider the first-family-first principle and the voluntary nature of the respondent’s decisions.

82In Fisher v. Fisher, 2008 ONCA 11 at para. 39, the court stated:

While courts generally recognize a "first-family-first" principle (which provides that a payor's obligations to the first family take priority over any subsequent obligations), inevitably new obligations to a second family may decrease a payor's ability to pay support for a first family. [Emphasis added].

83As explained in Fisher, an obligation to a second family “must be considered in context”. Here, as in Fisher, part of the context is the voluntary assumption of an obligation. In this context, the court must look at whether the “respondent's obligations to his first family would impoverish his second family”. The motion judge did not undertake this analysis. The court in Fisher stated as follows at paras. 40-41:

40 In each case, obligations toward second families must be considered in context. For example, where spouses with a child separate, and one remarries and produces another child, the obligations to the second child will affect support for the first family because the payor has an equal obligation to both children. However, that is not this case.

41 In this case, the respondent voluntarily assumed significant responsibility for his second family when he knew, or should have known, of his pre-existing obligation to his first family. He assumed this obligation even though the second family is capable of contributing to its own support provided the respondent's new partner completed her qualifications to practise as a physiotherapist in Ontario. In addition, the second family receives child support from the children's biological father. This is not a case where the respondent was obliged to support his new family, at least beyond the temporary legal obligation based on their initial immigration status. In any event, there was no evidence that the respondent's obligations to his first family would impoverish his second family. In these circumstances, the respondent's endorsement of his second wife's preference to remain at home cannot be relied upon to reduce his support obligation to his first family. [Emphasis added.]

84The respondent voluntarily made a series of decisions that contributed to his increased financial obligations. He adopted Katie’s children and assumed financial responsibility for them. Together with Katie, the respondent incurred debt to purchase a larger home, upgrade the family cars and take vacations. They never discussed how they would make up the loss of the child support payments. The respondent testified that they “would just have to deal with it”.

85The respondent assumed all of these responsibilities having just agreed to pay the appellant $1,500 in monthly spousal support. He knew that the appellant was seriously disabled, wanted to remain living in the condominium and would require spousal support for the rest of her life.

86In 2014, the respondent and Katie assumed responsibility for a fourth child, without regard to their ability to afford this additional cost.

87The motion judge acknowledged that the adoption was voluntary. She accepted that the adoption was “altruistic” and she “was not prepared to fault him for his actions”.

88She described the children as “abandoned”. However, the evidence of their father’s threat was hearsay and arose during a single “pretty short conversation”. Although Katie testified that Joe sent her texts after the call, copies of these texts were not produced.

89Joe was paying child support despite the “struggles” that Katie had with him. There was no evidence that he was in arrears or that he was unable to pay child support. Katie offered no evidence to corroborate her past difficulties with Joe. If she went to court to deal with such difficulties, copies of court orders were not produced. If he did threaten to stop paying child support, there was no evidence to explain why it could not be collected and paid through the Family Responsibility Office.

90The motion judge erred in law when she saddled the appellant with the financial brunt of the respondent’s voluntary decisions. As the judge stated, the appellant had to adapt her lifestyle to a decreased income. The motion judge did not explain how the appellant could adapt. Her lifestyle was frugal, and selling her condominium (which has little equity, if any) was not a realistic option to expect her to bear in the circumstances of this case.

91The variation in spousal support was made without a consideration of whether the respondent’s obligations to the appellant “would impoverish his second family”. This was contrary to Fisher and wrong in law on the facts of this case.

92The motion judge gave no consideration to how the respondent could remedy the financial problems that he voluntarily created and assumed. For example, the respondent could sell his house to access the equity and rent a home. At the time of the motion, Katie was taking courses online and working part-time in the wills and estates practice. If she was able to care for her child and take on these tasks, it is not unreasonable to expect that she could find a better paying part-time job while working out of the home or in the evenings when the respondent returns home. The motion judge did not undertake this type of assessment.

93There was no consideration of the fact that the respondent had been able to pay off some of his significant debts by the time of the motion or that he owed the appellant about $8,000 in spousal support arrears.

94In summary, the motion judge’s approach was wrong in law and contrary to the first-family-first principle given the factual context of this case.

The Materiality of the Change in Circumstances

95Subsection 17(4.1) of the Divorce Act requires that the court first be satisfied “that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order”. Once a change is found to have occurred, the court must decide if the change is material. A material change must be a sufficient change (see Albergaria v. Albergaria, 2016 ONSC 1666 at paras 41-43).

96The motion judge stated that she was “satisfied that the conditions for variation of the existing order do exist.” She was also “satisfied that the ‘change in circumstances’ is a ‘material’ one, not contemplated at the time of the original order”.

97The motion judge assumed the changes were material without assessing the financial facts. This was clearly wrong. The financial context informs the materiality assessment, and this was not done.

98The respondent had been living with Katie and her family since September 2006. They lived in her home, and the respondent shared the household expenses. He voluntarily increased the household expenses after they married when they bought a larger home. There was no evidence that this was justified. They had been living together in this house since 2006.

99In 2009, while they lived together in Katie’s home, the respondent paid $1,000 as his share of the household expenses. This increased with the purchase of the new home. The respondent’s 2013 financial statement reveals monthly household expenses that total $1,865, an increase of $865 a month.

100The increased financial obligation could, for example, be measured by the loss of child support ($1,456). If the family had stayed in the same house, they would have had an extra $865 a month. This would have reduced the burden of having chosen to forego the child support payments to $591 a month. Given the respondent’s assets and the context of this case, it would be wrong to characterize the $591 difference as material.

101The respondent had assets. His LIRA was worth $228,000 in 2012, and at the time of the motion, it was valued at $282,913. By comparison, the appellant’s only assets were a used car and her fully mortgaged condominium.

102In the respondent’s 2013 financial statement, he records a debt to CRA of $36,500. He was paying CRA $3,000 a month. By the time of the motion, his parents had paid this debt in full and he was paying them back at $400 a month. He had also repaid a loan from his brother of $25,255 and reduced his line of credit.

103The respondent’s financial statement listed taxes of $2,000 a month. He admitted on cross-examination that he never paid anything close to $24,000 a year in taxes. In fact, his tax return confirmed that he paid $5,365 a year or about $500 a month.

104The respondent admitted that his income in 2014 was $7,400 a month or $84,000 a year. The SSAG for 2014 that the respondent provided to the motion judge used the lower income of $70,000. The motion judge based her award on an income of $70,000 and this was clearly wrong.

105The motion judge did not take into account that Katie has been taking courses at Ryerson online and assisting with work in the wills and estates practice. The motion judge accepted that she cannot work part-time even though she is devoting time to studies and work from her home.

106In summary, a change must be material and it was wrong to assume that the respondent’s changes were material without fully analyzing his financial circumstances.

Subsection 17(7) of the Divorce Act

107After finding a material change in circumstances, the motion judge considered the SSAGs and varied the spousal support. The brief reasons for the variation do not reveal a consideration of the objectives set out in s. 17(7) of the Divorce Act. Instead, the motion judge relied on s. 15.2 of the Divorce Act. This was an error in law.

108If the court finds that the party seeking a variation has demonstrated a material change in circumstances, Willick and LMP require the court to “determine what variation to the order needs to be made in light of the change in circumstances. The court then takes into account the material change, and should limit itself to making only the variation justified by that change” (LMP at para. 47).

109A variation is a two-step process that requires a finding of material change in circumstances and then a consideration of s. 17(7) of the Divorce Act. The motion judge did not consider s. 17(7). At paras. 48 and 50 of LMP, the court described the interplay between s. 17(4.1) and s. 17(7) as follows:

48 Variation involves the application of both s. 17(4.1) and s. 17(7) of the Divorce Act. In Hickey, L'Heureux-Dubé J. described the interplay between them as follows:

On an application for variation of an award of spousal support, the court must first find, under s. 17(4), that there has been a material change in the conditions, means, needs, or circumstances of either spouse (see Moge, supra, at pp. 875-76, and Walker v. Walker (1992), 12 B.C.A.C. 137, at pp. 141-42) and in making the order, the court must take into consideration that change. As with the variation of child support orders, this change must be material, and cannot be trivial or insignificant. The factors enumerated give the court considerable discretion in determining whether a variation order is justified: see J. Payne, Payne on Divorce (4th ed. 1996), at p. 321. Once this threshold is passed, the court must consider the four objectives of spousal support enumerated in s. 17(7) of the Divorce Act. [para. 20]

50 In short, once a material change in circumstances has been established, the variation order should "properly reflect the objectives set out in s. 17(7), ... [take] account of the material changes in circumstances, [and] consider the existence of the separation agreement and its terms as a relevant factor" (Hickey, at para. 27). A court should limit itself to making the variation which is appropriate in light of the change. The task should not be approached as if it were an initial application for support under s. 15.2 of the Divorce Act.

110The variation order was retroactive to November 1, 2013. The motion judge gave no consideration to the guiding principles that govern a retroactive support order.

111In D. (B.S.) v. G. (S.R.), 2006 SCC 37 at paras. 99-116, the Supreme Court determined that a court deciding whether to make a retroactive award of child support should consider the reason for the recipient parent’s delay in seeking child support, the conduct of the payor parent, the past and present circumstances of the child, including the child’s needs at the time the support should have been paid and whether the retroactive award might entail hardship.

112In Kerr v. Baranow, 2011 SCC 10 at para. 212, Cromwell J. confirmed that the same principles apply in the spousal support context:

While S. (D.B.) was concerned with child as opposed to spousal support, I agree with the Court of Appeal that similar considerations to those set out in the context of child support are also relevant to deciding the suitability of a “retroactive” award of spousal support. Specifically, these factors are the needs of the recipient, the conduct of the payor, the reason for the delay in seeking support and any hardship the retroactive award may occasion on the payor spouse.

113The Ontario Court of Appeal also held that the principles applicable to the award of retroactive spousal support are similar to those applicable to child support: P. (S.) v. P. (R.), 2011 ONCA 336, 332 D.L.R. (4th) 385 at para. 59.

114The effect of the retroactive award required the appellant to reimburse part of the spousal support that she had received since November 1, 2013. From November 1, 2013 to January 1, 2015, she owed the respondent $718 per month for a total of $11,488. The motion judge did not consider the hardship of this retroactive payment given the appellant’s needs and limited resources. This was an error in law.

conclusion

115In summary, for the reasons set out above, I allow the appeal and set aside the order of Gorman J. dated February 13, 2015.

116Given this result, it follows that the costs order of Gorman J. dated April 8, 2015 shall also be set aside.

117Since the variation of the final order, the respondent has been paying spousal support in accordance with the order of Gorman J. The appellant is entitled to a retroactive adjustment that will restore full payment of the spousal support that is owed under the final order. This court was not provided with a calculation of what the respondent owes for past spousal support.

118I make the following orders:

(1) The appellant’s appeal is allowed.

(2) The order of Harper J. dated December 1, 2009 is restored. The respondent shall pay the appellant $1,500 a month for spousal support pursuant to the December 1, 2009 order.

(3) The order of Gorman J. dated February 13, 2015 is set aside. This is retroactive to the date of the commencement of the variation on November 1, 2013.

(4) The respondent shall pay the appellant any past spousal support that he owes.

(5) The costs order of Gorman J. dated April 8, 2015 is set aside, and the respondent is ordered to repay these costs to the appellant to the extent that the appellant has paid the costs.

(6) The parties have agreed on the costs of the appeal. The respondent shall pay the appellant costs of this appeal fixed at $9,000 all inclusive.

___________________________ C. Horkins J.

Marrocco, A.C.J.S.C.

M. Varpio J.