Court File and Parties
COURT FILE NO.: FS-08-7772.01 DATE: 20170421 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Jeffrey Alfred Jacob Applicant – and – Shelley Lynn Rose Jacob Respondent
Counsel: J. Joel Wright, for the Applicant Zane R. Handysides, for the Respondent
HEARD: November 16, 17 and 18, 2016
Reasons for Judgment re motion to vary spousal support
Carey J.:
[1] Shelly Jacobs brings this application to vary her spousal support and the child support as ordered by Cusinato J., April 30, 2010. There is agreement that the child, Tawnya, is no longer a child of the marriage and is self-supporting, which creates the circumstances for the variation application. There is disagreement as to when that occurred.
Background
[2] The parties were married for just under 27 years and had three children together, Tyson, Trevor and Tawnya. It was essentially a traditional marriage with Ms. Jacob taking the primary role in child support and Mr. Jacob being the main earner during the marriage. The parties separated in 2008 and executed minutes of settlement in January 2010. At that time, Mr. Jacob was the custodial parent to Tawnya and support of $332 per month commencing February 1, 2010 was ordered based on Ms. Jacob’s annual income of $21,840. That amount was set off against the $1,067 per month spousal support to be paid to Ms. Jacob, resulting in payments of $735 per month spousal support commencing February 1, 2010.
[3] The minutes of settlement were incorporated in a consent order of Cusinato J. made April 30, 2010. This motion to change that final order was commenced in April of 2014 and was triggered by the pending graduation from college of Tawnya Jacob. The motion seeks to stop child support payments and increase the spousal support payment to $2,000 per month based on the needs of Ms. Jacob and the increased income of Mr. Jacob. The motion alleges that Mr. Jacob did not comply with financial disclosure obligations set out in paragraph 6 of the order. The motion sets out the claim that the respondent, Ms. Jacob, was financially disadvantaged by the breakdown of the relationship and had not been able to generate income to allow her to become self-supporting due to her minimal work experience during the marriage. On February 12, 2015, a consent order was made by Rogin J. increasing the amount of spousal support to $1,067 per month on an interim without prejudice basis.
Issues
[4] While the parties agree on the issue of Ms. Jacob’s entitlement to spousal support, they disagree on the quantum of support. Ms. Jacob is seeking $2,400 per month retroactive to June 1, 2014, plus credit for all child support payments made by her after June 1, 2014. She asserts that Mr. Jacob’s income for support purposes should be set at $84,642 based on his previous year’s income tax return. She suggests any arrears of spousal support may be made at the rate of $600 per month until paid in full. Mr. Jacob says his income has been falling and should be set for support going forward at $72,000 per annum. He argues the amount of support sought is excessive and, in any event, the motion to vary only sought $2,000 per month. He says a higher income should be imputed to Ms. Jacob. She says she was hampered in framing her request by the non-production of income statements as required by the order of Cusinato J.
[5] The parties disagree as to when Tawnya became self-supporting and ceased to be a child of the marriage pursuant to the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.). Mr. Jacob says that only occurred recently.
[6] Ms. Jacob also requests that the respondent transfer his ownership interests in a term life insurance policy that has face value of $100,000 and designate her as an irrevocable beneficiary of his group life insurance through work. Mr. Jacob says that was not sought in the motion to vary. The respondent moving party relies on paragraph 13 through 15 of the order of Cusinato J. in relation to the insurance claims.
[7] The parties disagree as to the extent that Ms. Jacob needs spousal support. Her former spouse argues that as the original order used a spousal support figure in the low Spousal Support Advisory Guidelines (“SSAG”) category, that any new figure must reflect the same category of SSAG support. Ms. Jacob’s position is that this is a new calculation and the court should not be hampered by factors behind the last calculation. Mr. Jacob argues that his ability to pay a higher amount will be affected by his age (58) and his desire to ease into less hours and eventually retirement. The fact that his wife is entitled to an inheritance from her late father should be taken into consideration as well. Ms. Jacob seeks support on a compensatory basis to reflect the economic disadvantages that accrued to her because of the marriage and its subsequent breakdown.
Evidence
Ms. Jacob’s Evidence
[8] Shelley Jacob, now 55, testified that she resides with one of her sons at the former matrimonial home at 7725 Disputed Rd. in Windsor. She was 18 when she began her relationship with Mr. Jacob. She is a high school graduate who completed a hair dressing course from Marvel. The last time she worked as a hairdresser was 25 years ago. She had to give up hairdressing because of allergic reactions to the chemicals used in salons. During the marriage she had some part-time jobs including as a bagger in a grocery store and selling wines in a shop also within a grocery store. These were minimum wage positions. Between her first and second child, she took time off and, at her husband’s urging, became a stay-at-home mother after her second son was born.
[9] She remained out of the workforce until 1999 when Tawnya was seven and in school. Around that time, she was helping out an aunt in a hospital when she met a lady who needed some assistance with her father’s care and she began working with him for minimum wage remuneration. Although she had no training, she gradually built up clientele as a personal support worker (“PSW”) for mostly elderly patients. At the time of her giving evidence, she had six such clients at hourly remuneration between $15 and $18 per hour employing her for 33 paid hours per week. Her remuneration did not include travel time. Exhibit 1 was her calculation of her current income and expenses which she calculated to be bringing her a net income of $22,595.56 per year.
[10] She resisted the suggestion in cross-examination that she would be better off going back to school to get her diploma as a PSW. She said many of the PSW graduates are not employed and that she would not be able to afford to be out of income while studying for a degree that she did not feel would advance her economic position. She testified that she had a slight stroke in 2014 that required her to reduce the stress in her life in that she tries to limit herself to three days per week of working.
[11] She testified that near the end of her marriage, she started dealing with depression and started on doctor prescribed anti-depressants. She attributed the depression to the sudden end of her marriage to “the love of my life”. It was clear in her evidence that she still found speaking about the marriage and its end emotionally difficult. While her daughter Tawnya lived with her after the separation for a while, they eventually had conflict over which she termed her daughter’s “acting out”, and Tawnya went to live with her father.
[12] Her mother died in 2013. Her father, to whom she was closer, passed away in 2015. She was only able to take the day of the funeral off her work schedule. She received, along with each of her brothers, $23,000 from the insurance on her father’s life which she used to pay off debt. There is a small house that has been left to her and her two brothers which one of her brothers resides in and which has not yet been readied for sale. It may be that that brother will buy it. She has borrowed about $11,000 between her two brothers to pay off her debts. She owes about $25,000 on her home. She confirmed her financial statement found at tab 4 of the trial record. That statement shows her spending what she earns. She has taken on paying the premiums of a life insurance policy of Mr. Jacob. The insurance policy for Mr. Jacob was not increased as he was unable to get additional insurance as a result of failing a drug test.
[13] She testified that during her marriage she and her husband would take a nice vacation at least once per year at all-inclusive resorts and she has not had a vacation for seven years. She has had to borrow money to pay bills. Her home is listed for $180,000 but is in need of repair in its foundation. She has had an estimate that that would cost about $40,000. Currently, some repairs on the home are being done by her brother. She drives a 2012 Chevy Cruze that she purchased in November 2016 after her old car was destroyed by fire in an apparent act of vandalism.
[14] She estimates that she may receive, after expenses, an amount of $110,000 from the sale of her house that she would use to pay off her line of credit, her brothers and other debts. She said that her daughter, Tawnya, was employed during her college years and immediately afterwards in a pet store and part time with a dentist. She testified that her daughter recently found full-time employment about a month before she gave evidence. She says that Tawnya and her boyfriend rent a house from the dentist who employs her and that her boyfriend, Josh, is employed. She indicated her source of information was from her son Trevor and from the boyfriend Josh’s mother.
Mr. Jacob’s Evidence
[15] Mr. Jacob was 57 at the time of this trial and employed in the tool and die industry. While he indicated he was the primary earner during the marriage, he said that he had domestic duties during the marriage including getting the children up and off to school while his wife slept and that she worked in various positions including hairdressing, selling wine and child care for others during the marriage. He testified the marriage ended after a period of arguing between he and his wife. He said that he woke up one night and knew he had to make a change. He left in the middle of the night leaving the children with Ms. Jacob. He testified that their son Trevor came to live with him shortly thereafter and that Tawnya came to live with him later. He said that his daughter Tawnya had only just moved out of his home about a month before the trial and was living now with her boyfriend Josh. They reside in a house owned by the dentist she is now working with. He testified that she was only recently earning enough money to support herself. This statement was objected to by counsel for Ms. Jacob as hearsay. Mr. Jacob referred to Tawnya’s 2015 income tax return which he prepared for her which indicated that her income was $12,000. He says that until she moved out she did not contribute rent and had only recently started purchasing food. He said that his son Trevor continued to live with him and paid room and board of $80 per week. Trevor is employed at the same firm as Mr. Jacob.
[16] Mr. Jacob was also asked about the market value of the home at 7275 Disputed Rd. He was shown an appraisal that indicated a market value of $154,000 but he did not recall seeing that appraisal. He indicated no memory of the contents of the minutes of settlement and that he had just signed on the basis of the advice of his lawyer at the time. Through him was filed as exhibit 12 a letter from his employer, Integrity Tool and Mold dated June 3, 2010, which indicated that he had at that time been earning $24 per hour on a 40-hour work week. He filed as exhibit 13 a statement from his employer to November 6, 2016 indicating a total gross pay of $64,846.64 at a pay rate of $32 per hour. A copy of his tax return for 2014 was filed (exhibit 14). He has indicated that he earned from his employment $86,628.52 with an indication of $10,000 in RRSP income and his total income for that year was $96,628,52. He also filed his 2015 income tax return summary which indicated a total income for that year of $84,664.42. A brief was filed as exhibit 16 which included summaries of his income from 2010 through to 2015. He also filed (exhibit 17) a letter from Integrity Tool and Mold indicating an employee life insurance policy of $25,000 with Tawnya Jacob indicated as his dependent. He said that his daughter has a significant debt load built up while a student.
[17] Mr. Jacob says as he is approaching 60, he is looking to reduce his overtime but has not made plans yet to retire. He has not been contributing to the company pension plan. He indicates that he has personal debt of over $40,000 which includes money needed for legal fees and a motorcycle. He agrees he has not changed his lifestyle although is not earning as much as he was. During his marriage he admitted he used cocaine recreationally as well as marijuana. He said that most of the time this was used together with his former wife. He denied any income as a result of drug trafficking and indicated he sought counselling for drug use and has refrained in recent years from that lifestyle. He denies that he received numerous requests to provide income tax returns since the divorce and that his former spouse did not provide hers to him.
[18] In cross-examination, Mr. Jacob elaborated that he cooked dinners and breakfasts quite often during the marriage and often did laundry and other chores such as cleaning toilets and showers. He agreed that, for the most part, he would call the marriage traditional. He denied that there were annual vacations as indicated by his wife but that they went to Cuba about three times in eight years. He said his new motorcycle cost him $22,000 and that he uses it to ride to work. He explained he is able to make payments as he gave up smoking which saves him a considerable amount of money. He has a girlfriend whom he sees on the weekend. He does not intend to move in with her and puts some of the reason for that on the ongoing effects of the trial and unresolved issues between him and his former spouse.
[19] While he says his debt is considerable and his financial situation is worse that during the marriage, he rejects bankruptcy as suggested by counsel for Ms. Jacob.
[20] In regard to his support of Tawnya, he indicated that she was able to borrow money to buy a car and pay for its insurance over the last year and a half. He says that she has had some help from her aunts but he has not paid her any allowance. He said that over the period of time that his daughter was living with him, her boyfriend lived with his parents with occasional overnights at his house. It is his position that child support should be terminated as of November 2016.
[21] He denied his income will continue to increase and that there was anything strategic involved in his not caring to work overtime any longer. He said that he stopped paying the Manulife policy on the advice of his former lawyer. When asked about why he would not transfer the insurance policy to his former wife’s name, he answered “I don’t feel like it.”
[22] When he was asked about the income indicated in the original minutes of settlement, he said he did not know where the figure came from or how it was calculated.
Analysis
[23] Both parties in this litigation impressed me as remaining bitter about their marriage and its end. In my opinion, neither of them were able to look objectively at the issues in this case. Having said that, I generally preferred the evidence of Shelley Jacob as more credible and straightforward. Her recall of detail and her responses in questioning and cross-examination generally impressed me. Mr. Jacob did not have a firm recall of past events and many situations and could be chippy and defiant in his responses.
[24] Dealing with the issues in this trial, I begin by concluding that there is no foundation here to go behind the minutes of settlement and the order of Cusinato J. from April 2010. There is no basis to find that spousal support was lower as a result of a form of lump sum payment by virtue of a lower purchase price for Mr. Jacob’s interest in the matrimonial home. I reject the argument that the use of a support figure at the lower end of the SSAG table in 2010 requires me to use the lower amount in this trial. There is an agreement here that appropriate circumstances exist as a result of the end of child support to vary the amount of spousal support. This involves a fresh look at all of the relevant circumstances.
[25] I accept Shelley Jacob’s evidence about her current income and her current financial situation. I do not accept that it would make any sense for her to quit her current self-employment to go back for certification to do the same type of work as an employee. Given her time out of the workforce, her education and her age, I accept that she is earning currently to her capacity. I am not prepared to impute a higher income to her in all of the circumstances.
[26] I am also not prepared to find that she should be selling her present house and moving into an apartment at this time. I am not satisfied on the evidence that this would result in any real savings for her and it would remove the stability of housing that is largely paid for.
[27] In regards to the future inheritance that may come on the settling of her father’s estate in the selling of the house, I am not prepared to factor in that future event into her present needs calculation. I do not agree with Mr. Jacob’s position that the estate has taken an inordinate long time to be settled. I accept Shelley Jacob’s evidence about the clutter in the house and her brother’s sentimental attachment to both the house and its contents. It is clear on her evidence that she has borrowed against her interest from her brothers but I have not enough evidence about the amount of the inheritance or when it might be forthcoming to factor it into this case. If her financial situation changes in the future as a result of a significant bequest, that might very well be a change of circumstances that would result in a further review.
[28] In regards to Tawnya Jacob, I am satisfied based on her income in 2014 and the fact of her graduation from St. Clair College that same year that as of June 2014 she ceased to be a child of the marriage pursuant to the definition found in the Divorce Act. Her income first year following graduation was in excess of her mother. Tawnya may have chosen to take part-time employment and continue to reside under her father’s roof and with her father’s support save money but I am not satisfied that she was unable to withdraw from parental support. I conclude that child support should be terminated retroactively to June 1, 2014.
[29] As a result of my conclusions regarding termination of child support pursuant to s. 15(3)(iii) of the Divorce Act, this finding constitutes a change of circumstances for the purposes of consideration of a variation of the existing spousal support order. In considering the appropriate amount for spousal support going forward, I am required to consider the factors listed in s. 15.2(4) of the Divorce Act. In addition, I must consider the objectives set out in subsection 15.2(6) as mirrored in s. 17(7) of the Divorce Act. In doing so, one of the factors that I must look at in addition to the length of time of the marriage is the age of the parties. I accept that this marriage qualifies as one where the “rule of 65” set out in the SSAG applies so as to make an order for spousal support an indefinite one. Ms. Jacob continues to need support and given her age I have, as mentioned earlier, concluded that she is currently incapable of earning much higher income than she is currently earning. At the same time, I am not prepared to conclude that Mr. Jacob should be unable at his age to refuse overtime or even contemplate retirement. As well, I am not prepared to say that he should be contemplating bankruptcy or be selling his motorcycle in order to fund a higher support order. He has made lifestyle choices that have affected his income and his debt. I accept the reasonableness of he taking less overtime especially as it appears that within the company there is more competition for the overtime. However, the debt that he has accrued for vehicles is irrelevant to the support analysis. He needs to budget and recognize the priority that his wife’s support obligations have. I do not, however, find any basis to impute to him any income beyond his employment income.
[30] It may require him to adjust his lifestyle especially as he is voluntarily reducing his income. Having said that, I accept the calculations of his counsel based on the employer’s letter, that his 2016 net income is likely to be about $72,000. I accept that as an appropriate basis for a support order going forward. While Mr. Jacob had employment income in 2015 of $84,642, I accept that from June 1, 2014 to approximately October 31, 2016, their daughter Tawnya continued to reside with Mr. Jacob until she found full-time employment in her chosen specialty as a dental hygienist. I accept that she ceased to be a child of the marriage upon graduation on May 31, 2014 with her college diploma.
[31] I have concluded that this is an appropriate situation for retroactive spousal support to be paid. Mr. Jacob had an obligation to provide annual income statements to his former spouse and while she had a similar obligation, he was the payor on a net basis and must bear responsibility for ongoing disclosure. For the purpose of calculating the retroactive support, I have accepted that Ms. Jacob’s income from June 1, 2014 should be calculated as $27,000 per annum. I have concluded that Mr. Jacob’s employment income for support purposes for the years 2014 and 2015 was $84,000 per year approximately. While his 2014 income was declared at $96,628, I accept that in that year there was a $10,000 RRSP cashed in and he should not have it again treated as income. I conclude, based on the letter from Mr. Jacob’s employer and Mr. Jacob’s evidence, that his income for support commencing January 1, 2016 is $72,000 per annum.
[32] In the circumstances of this case, I have concluded that a lump sum payment order is most appropriate for the arrears of spousal support. I attach as Schedule “A” to this judgment the DivorceMate calculations based on Mr. Jacob’s employment income of $84,000 per annum and Ms. Jacob’s $27,000 per year income. I have done so taking into account there were previous minutes of settlement for support which I conclude would have taken into account the compensatory factors set out in the Divorce Act. I also take into account that although no longer a child of the marriage, Tawnya Jacob continued to reside with her father and he continued to provide voluntary support for her until October 2016. I do not find it unreasonable in the current economy that a young college graduate would need continued parental assistance while she found full-time employment although she had ceased to be defined as a child of the marriage under the Divorce Act upon graduation from college. I have concluded that the facts of this case warrant the use of the Guidelines in the low end of the scale for the time Tawnya lived with her father. As a result, I have concluded that an appropriate amount of support for the 19 months from June 1, 2014 until December 31, 2015, should be $1,800 per month. Deducting the $1,067 per month that has been paid effective June 1, 2014 forward, there is left an amount of $733 per month owing for retroactive support over a 19-month period.
[33] As previously indicated, I set Mr. Jacob’s income for support purposes from January 1, 2016 forward at $72,000. Attached as Schedule “B” is a DivorceMate calculation based on this income and income of $27,000 per annum for Ms. Jacob. Using this calculation, and taking into account Mr. Jacob’s assistance to Tawnya, I conclude that the appropriate amount of support for the 10-month period from January 2016 to October 31, 2016 is $1,400 per month. Deducting the $1,067 paid, the amount owing is $333 per month.
[34] Although I did not receive submissions on the issue, I am cognizant that, as set out in Samoilova v. Mahnic, 2014 ABCA 65, Revenue Canada would not consider retroactive spousal support generally as deductible by the payor. In that circumstance, it is appropriate to consider the tax implications to the payor. Based on the income figures in Schedules “A” and “B”, I accept that the average tax rate between the two parties would be 20 percent. With a retroactive order of $733 per month (for 19 months) and $333 per month (for 10 months), the total owing before any deduction for tax implications would be $17,257. Applying a 20 percent reduction leaves a rounded out amount of $13,800 owing for retroactive support.
[35] On a go-forward basis from November 1, 2016, using the calculation attached as Schedule “B”, I have concluded that a “Without Child Support” Formula close to the mid-range is appropriate when all of the factors set out in the Divorce Act are taken into account. I have concluded that an appropriate amount of spousal support going forward will be $1,600 per month commencing November 1, 2016.
[36] I am satisfied on the insurance issues that as the applicant has been paying for the term life insurance that it should be transferred to her name and as well that the respondent should be designated as the irrevocable beneficiary of the applicant’s group life insurance through his employment.
Orders
[37] As a result, I make the following orders:
1(a) Beginning November 1, 2016, the applicant shall pay the respondent the sum of $1,600 per month for support of the applicant; (b) The applicant shall pay the respondent the amount of $13,800 lump sum spousal support to address the time period June 2014 to October 31, 2016; (c) The timeframe for repayment will be determined between the applicant, Mr. Jacob, and the Family Responsibility Office. (d) Paragraph 5 of the order of Justice Cusinato dated April 30, 2010 regarding child support shall be deleted effective June 1, 2014.
2(a) The applicant shall transfer to the respondent his ownership interest in the term life insurance policy through Manulife with a face amount of $100,000 in coverage and bearing account number 5258817; (b) The applicant shall designate the respondent as an irrevocable beneficiary of his group life insurance through Integrity Tool and Mold.
[38] If the parties are unable to agree on costs, they should provide their submissions to me within 30 days of this order. Specifically the submissions of Ms. Jacob should be served and filed within 14 days and Mr. Jacob within 7 days following that and any response from Ms. Jacob within 7 days of that. Each submission should be no longer than two (2) single-spaced pages, along with a costs outline.
Original signed by Justice Thomas J. Carey
Thomas J. Carey Justice