Court File and Parties

COURT FILE NO.: FD151/16 DATE: August 7, 2018

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

John Anthony Shelley Applicant

Monique Rae Bennett for the plaintiff

• and -

Josephine Anne Shelley Respondent

Jordan D. McKie for the respondent

HEARD: November 16, 17, 20, 21, 22, 2017; February 1, 2018; written submissions completed February 13, 2018

MITROW J.

Introduction

[1] The sole issue in this trial is the claim made by the respondent, Josephine Anne Shelley (“Ms. Shelley”), pursuant to the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) c.3 [as am. by S.C. 1997, c.1] for spousal support contrary to an existing separation agreement. The applicant, John Anthony Shelley (“Mr. Shelley”), commenced an application seeking only a divorce. In her responding pleadings, Ms. Shelley sought an increase to the spousal support from what was provided pursuant to the second of the two separation agreements signed by the parties.

[2] The parties signed a lengthy and comprehensive agreed statement of fact that was filed at trial. There also were some consent orders made prior to trial dismissing some aspects of Ms. Shelley’s claim.

[3] It was agreed that Ms. Shelley, as the respondent, would present her case first as spousal support was the only active claim left in this proceeding. Mr. Shelley’s claim for a divorce had been severed and the divorce was granted in June 2017.

[4] Ms. Shelley sought an order for spousal support in the amount of $4,866 per month commencing May 1, 2017, being the high end of the Spousal Support Advisory Guidelines (“SSAG”) range for an indefinite term and based on the parties’ most recent incomes - $199, 367 for Mr. Shelley and $53,375 for Ms. Shelley – for the 2016 calendar year.

[5] Pursuant to the second separation agreement signed in 2012, the quantum of spousal support was agreed at $2,500 per month, indexed, payable until December 31, 2029. This agreement limited the variation of spousal support as discussed in more detail below.

[6] Mr. Shelley brought a motion for non-suit at trial. He submits that the evidence at trial, which includes the agreed statement of fact, should result in the dismissal of Ms. Shelley’s claim for spousal support as there is no basis in law to depart from, or override, the agreement made by the parties.

[7] The proper disposition of this case engages the application of the analysis discussed in Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303 (S.C.C.).

[8] For reasons that follow, both Mr. Shelley’s motion for a non-suit and Ms. Shelley’s claim for spousal support are dismissed.

Background Up to the Date of Separation

[9] Both parties are from Ireland. They met there as teenagers and had a dating relationship at that time.

[10] Ms. Shelley was born in 1967 and Mr. Shelley was born in 1966. At the time of trial, Ms. Shelley was age 50 and Mr. Shelley was age 51.

[11] The parties each came to Canada at separate times, following which their relationship was rekindled. They began to cohabit in Canada in 1989, they were married in 1991 and they separated on December 31, 2009 after a 20 year relationship.

[12] There are two children of the marriage, Jack, born in 1995 and Mark, born in 1998. Currently, Jack lives with Ms. Shelley, although he is no longer a dependent child entitled to child support pursuant to the Divorce Act; Mark currently lives on his own with friends in an apartment and was attending second year university in London, Ontario at the time of the trial.

[13] Despite agreeing in the agreed statement of fact that the date of separation was December 31, 2009, Ms. Shelley, including during her evidence in-chief, testified that in her view the parties had separated later than December 31, 2009. During cross-examination, Ms. Shelley stubbornly maintained this position despite also having disclosed December 31, 2009 as the date of separation in an affidavit, two separation agreements and the family history portion of her pleadings.

[14] Ms. Shelley’s evidence on this point was ill-advised and not credible. I find that the parties separated on December 31, 2009.

[15] In terms of employment, soon after coming to Canada, Ms. Shelley started working in insurance, initially in customer service. Ms. Shelley took various courses and, from her evidence, it is easy to conclude that Ms. Shelley was quite dedicated to her work; she received promotions and attained her Charter Insurance Professional (“CIP”) designation in or about 1995, which permitted her to practice as an insurance agent.

[16] Mr. Shelley worked in the area of information technology. He also took courses.

[17] The parties’ lives changed substantially starting in 1997 when they moved with their son Jack from Canada to Ireland. I am satisfied on the evidence that the move was an opportunity to further Mr. Shelley’s career. This move required Ms. Shelley to leave her fulltime employment.

[18] When the parties moved to Ireland, Ms. Shelley was pregnant with Mark. The parties then engaged in a series of moves where Mr. Shelley worked with various employers in the IT field. They lived in Ireland from 1997 to 2001; they then moved to the Netherlands in 2001, then to London, Ontario in 2003, then to London, England in 2005 and then back to London, Ontario in 2006.

[19] Mr. Shelley testified that he had worked with “Deloitte Ireland” from 1998 to 2001, at which time he resigned from Deloitte Ireland to work as an independent consultant, but with a Deloitte team, on a project in the Netherlands. Eventually, after returning to Canada permanently, Mr. Shelley joined Deloitte Canada in November 2007, where he continues to work.

[20] The parties agree that Ms. Shelley was not employed outside the home between 1997 and 2008. During this period, there were a few years that Ms. Shelley did report an income but that was as a result of some income splitting from Mr. Shelley’s income for tax purposes.

[21] During the various moves from 1997 until the parties and the children returned permanently to Canada in 2006, the evidence, I find, establishes that Ms. Shelley was the children’s primary caregiver. Her responsibilities and attention were focused on the children and running the household. This enabled Mr. Shelley to devote time to his employment, which included travel and being away from home.

[22] This division of responsibilities in the household continued for approximately two more years after the family returned to Canada in 2006.

[23] Although Ms. Shelley did return to work prior to separation, it was on a part-time basis. According to Ms. Shelley, it was not until 2013, to her recollection, that she returned to fulltime employment with an insurance company. She has continued fulltime employment since that time.

[24] After Ms. Shelley returned to work on a part-time basis, both before and after separation, Ms. Shelley assumed a disproportionate responsibility for childcare and meeting the needs of the children, while Mr. Shelley worked fulltime.

[25] While living in Ireland, the Shelley family faced traumatic challenges associated with the discovery that their eldest son was the victim of abuse perpetrated by an older child, who was the child of a person closely related to Mr. Shelley.

The Two Separation Agreements

[26] The parties signed their first separation agreement on July 22, 2011 (“the first agreement”). In April 2012, the parties signed a separation agreement (“the second agreement”) that amended the first agreement. Most of the focus at trial was on the second agreement, as it was that document that finalized the financial arrangements between the parties, including spousal support.

A. The First Agreement Signed July 22, 2011

[27] The first agreement was prepared by Mr. Shelley from a template that he found on the internet. It is a brief three-page typed document. Although this agreement states that it was made on December 31, 2009, it was not signed by the parties until over two and a half years later.

[28] The children generally had been living with each party on a week-about basis since separation. The first agreement provided for joint custody and a week-about parenting schedule.

[29] Regarding the child support, Mr. Shelley agreed to pay $1,575 per month to Ms. Shelley starting January 1, 2010. This was based, according to the agreement, on Mr. Shelley paying $1,992 to Ms. Shelley and Ms. Shelley paying $417 to Mr. Shelley.

[30] Spousal support was agreed at $1,700 per month, payable by Mr. Shelley to Ms. Shelley and continuing until December 2024. Regarding duration, this agreement provided that the last payment will be December 2024 “unless either parties (sic) circumstances significantly change (marriage, loss of job, etc.) at which time the agreement will be renegotiated.”

[31] There were no lawyers involved for either party in the preparation and execution of the first agreement. During her evidence in-chief, Ms. Shelley, when asked whether there were multiple versions of the first agreement before it was signed, responded “I believe so.” Ms. Shelley did not believe that she had discussed the $1,700 spousal support amount with Mr. Shelley, and Ms. Shelley could not remember whether there was discussion regarding a termination for spousal support.

[32] However, Mr. Shelley testified that they talked about “various pieces” within the agreement; that they agreed on the amount of spousal support and length of time guided by some DivorceMate online calculations. I accept Mr. Shelley’s evidence.

[33] The evidence satisfies me that there was active participation by both parties in the negotiations that culminated in the execution of the first agreement.

[34] During cross-examination, Ms. Shelley agreed, in relation to the first agreement, that: (a) she had read the agreement before she signed it; (b) she signed the agreement in front of her sister; (c) she signed the agreement freely with no one forcing her to sign it; and (d) it was her choice not to use a lawyer. It was Ms. Shelley’s evidence that she did not have the money to spend on a lawyer.

[35] Ms. Shelley testified that at the time she signed the first agreement that she had received information orally from Mr. Shelley as to his income. She knew that he had a base salary and bonus and that “... the bonus was a significant bonus but it varied from year to year.”

B. The Second Agreement Signed in April 2012

[36] I find on the evidence that Ms. Shelley was unhappy about the financial arrangements in relation to spousal support contained in the first agreement.

[37] In particular, Ms. Shelley testified in-chief that the amount and duration of spousal support “did not seem fair; this resulted, according to Ms. Shelley, in discussions with Mr. Shelley in the form of verbal and email communication. The cross-examination of Ms. Shelley as to who initiated the communication left no room for doubt that communication between the parties was instituted at the behest of Ms. Shelley.

[38] The second agreement was a typed 28 page document prepared by Mr. Shelley’s counsel in this trial, Ms. Bennett.

[39] The second agreement, although described as an “amendment,” is a fresh and comprehensive agreement containing all the usual release clauses as to spousal support and property. The matrimonial home had been sold and the proceeds equally divided, as confirmed in the second agreement. Each party received a little over $45,500.

[40] The relevant provisions in the second separation agreement in relation to spousal support can be summarized as follows:

a) The amount of spousal support is $2,500 per month (paragraph 6.1); b) The agreed upon spousal support is based on an income of $150,000 for Mr. Shelley and $25,000 for Ms. Shelley (paragraph 6.2); c) The spousal support is non-variable in the event of an increase in Mr. Shelley’s income (paragraph 6.3); d) The spousal support is indexed annually based on the Consumer Price Index starting June 2013 but not to exceed 3% (paragraph 6.4); e) Any claim for retroactive support is dismissed (paragraph 6.5); although this wording is suggestive of an ongoing court proceeding, there was no court proceeding at the time; f) The provision for variation of spousal support contained in paragraph 6.6 is a key factor in this case and is reproduced in full: The spousal support owing between the parties will be subject to change or variation (foreseen or unforeseen) if one or more of the following occurs between the parties: (a) If the husband retires but not until after he attains the age of 60; (b) If the husband loses his employment or has a period of unemployment due to disability; (c) Such further and other material change in circumstances to justify a variation of spousal support, either on consent or by order of the court such as unexpected injury, disability or the like. [my emphasis] g) The termination of spousal support is dealt with in paragraph 7. The key provision is paragraph 7.1, which is reproduced in full: Spousal support ends when: a) Josephine Anne dies; b) John dies; c) The parties earn an income that is within $5,000.00 of each other; d) December 31, 2029; e) Such further and other material change in circumstances to justify a termination of spousal support, either on consent or by order of the court such as unexpected injury, disability or the like. [my emphasis] h) Pursuant to paragraph 7.2, the agreement “is to be forever final and non-variable”; and i) There is no spousal support payable by one party to the other after 2029 (paragraph 7.5).

[41] In order to understand the complete financial arrangements in the second agreement, it is necessary to mention briefly the provisions relating to child support.

[42] The second agreement provided that the parties will have joint and shared custody of the children and that the children will reside with both parents on a “more-or-less equal basis.”

[43] The amount of child support was $1,575 (the same as the first agreement) and the second agreement specified that the child support was based on incomes of $150,000 and $25,000 for Mr. Shelley and Ms. Shelley, respectively.

[44] Both parties interpreted paragraph 6.6 (the variation clause) as precluding Ms. Shelley from commencing a variation proceeding to increase spousal support in circumstances where Mr. Shelley was no longer paying child support to Ms. Shelley. This engages one of the arguments advanced by Ms. Shelley – that she was precluded by the second agreement from commencing a variation proceeding to seek a potential increase in spousal support by applying the SSAG and “crossing-over” from the “with child support formula” to the “without child support formula.” This issue is explored in more detail later in these reasons.

[45] The proper disposition of this case requires a review of the pleadings, a consideration of the consent orders and the circumstances surrounding the negotiation and execution of the second agreement.

The Pleadings and Consent Orders

[46] Prior to Mr. Shelley commencing his divorce application in February 2016, there had been a change in the children’s living arrangements. Both parties were in general agreement as when these changes occurred.

[47] Both parties agreed that Jack went to stay with Mr. Shelley and that Mark continued with the week-about schedule for a period of time. In her testimony, Ms. Shelley described Mr. Shelley as being gracious by not lowering the child support immediately when Jack went to live with Mr. Shelley. Ms. Shelley agreed in cross-examination that this resulted in an overpayment of child support by Mr. Shelley. Later, Mark elected not to continue the week-about, preferring to stay with Ms. Shelley, while Jack remained with Mr. Shelley.

[48] The parties were able to deal with the necessary changes in child support on consent. They signed a brief document in May 2015 which provided that, as a result of a change in the living arrangements for Jack, that effective March 1, 2014 the child support payable by Mr. Shelley would be $1,000 per month.

[49] The parties later signed a brief two-page amending agreement dated January 13, 2016 to amend the child support provisions contained in paragraph 4.3 of the second agreement. The child support payable by Mr. Shelley was changed to $1,162 per month commencing January 1, 2016. The agreement stated that this child support was based on a gross annual income for Mr. Shelley in the amount of $188,892 and a gross annual income for Ms. Shelley in the amount of $43,113.

[50] Following the commencement of this proceeding, the parties were able to deal with changes in child support by way of two consent orders.

[51] An interim order was made on May 31, 2017, providing that the monthly Guideline support payable by either party to the other was terminated for Jack effective September 30, 2016 and for Mark effective April 30, 2017. However, s. 7 post-secondary expenses were to be continued to be shared with Mr. Shelley paying 66% and Ms. Shelley paying 34%. This order also required Mr. Shelley to pay $2,500 to Ms. Shelley in satisfaction of Mr. Shelley’s underpayment of child support for the period October 1, 2016 to April 30, 2017.

[52] The sharing of s. 7 expenses as provided in the interim order was a departure from the second separation agreement that required Mr. Shelley and Ms. Shelley to pay 80% and 20% respectively.

[53] Pursuant to partial minutes of settlement, a final order was made on November 2, 2017, on the same terms as the interim order, terminating monthly Guideline child support and providing for the sharing of s. 7 expenses.

[54] The result of the foregoing was that effective May 1, 2017, only Mark remained a dependent child as he was continuing to attend university, although living with neither parent. Ms. Shelley was no longer receiving any child support payments. At trial, the court-ordered obligation to share Mark’s s. 7 expenses was the only outstanding child support obligation.

[55] Commencing May 1, 2017, Mr. Shelley has paid Mark’s monthly rent expense of $500. Also, in September 2017, Mr. Shelley paid $3,411 towards Mark’s university tuition. Ms. Shelley has not contributed to these expenses. These facts are not disputed and are contained in the agreed statement of fact. Ms. Shelley questioned whether the rent was a proper s. 7 post-secondary education expense. I find that it is.

[56] Ms. Shelley signed her answer on April 13, 2016. She sought an order setting aside the provisions for spousal support and child support contained in the second agreement.

[57] Ms. Shelley attacked the second agreement alleging, inter alia, in her answer: (a) that she signed the agreement without financial disclosure, without legal advice and under time pressure; (b) that she was in a vulnerable emotional state and that Mr. Shelley took advantage of her; (c) that Mr. Shelley materially misrepresented his income as being $150,000 while knowing that his 2011 income was $170,597 and in 2012 it was $180,800; and (d) that the agreement was unconscionable.

[58] The evidence in this trial disclosed that the theory underpinning Ms. Shelley’s case was in a state of flux, that it was not grounded on a solid foundation, but rather was perched on shifting sands. This starts to become evident when examining some of the orders that were made and the amendments to the answer.

[59] On March 29, 2017, an order was made on consent that Ms. Shelley would bring a motion to amend her pleadings on the basis that her position is no longer a question of unconscionability, but that there has been a material change in circumstances.

[60] On May 31, 2017, an order was made on consent that the answer shall be amended to describe the changes in the children’s living arrangements, and that Ms. Shelley shall withdraw her claim that she did not receive independent legal advice. The amended claim alleged a material change in circumstances on the basis of the changes in the children’s living arrangements and that Ms. Shelley was no longer receiving child support.

[61] The order of Korpan J. dated September 18, 2017, made pursuant to partial final minutes of settlement, dismissed Ms. Shelley’s claim to set aside the agreements and dismissed Ms. Shelley’s claim to vary spousal support on the basis of a material change in circumstances.

[62] As can be seen, while Ms. Shelley obtained orders to amend her pleadings to include a claim of material change in circumstances, Ms. Shelley then subsequently consented to an order dismissing her claims to set aside the agreements and for variation of spousal support on the basis of a material change in circumstances.

[63] Not surprisingly, Mr. Shelley argues that the result of the court orders, in particular the order of Korpan J., creates a situation where, in effect, the claims made by Ms. Shelley in her pleadings have been dismissed. That, in part, prompted the motion for a non-suit.

[64] In response, Ms. Shelley submits that she consented to the court orders, in particular the order of Korpan J., to indicate that she was not seeking to set the agreements aside, nor was she seeking a variation of spousal support, but rather she would be pursuing an order of spousal support pursuant to s. 15.2 of the Divorce Act and would be requesting the court to make a different order under the Divorce Act that would have the effect of overriding the separation agreement.

[65] Ms. Shelley further submitted that her amended answer and the court orders did not preclude her from raising issues in relation to sufficiency of independent legal advice or aspects of unconscionability in the context of a Miglin analysis.

[66] As will be apparent in these reasons, the concerns being raised by Mr. Shelley may be somewhat moot because those issues being raised by Ms. Shelley, including for example the sufficiency of independent legal advice in the context of a Miglin analysis under s. 15.2, on the evidentiary record, are not sufficiently persuasive to override the spousal support provisions in the second agreement.

Circumstances Regarding the Preparation and Execution of the Second Agreement

A. Financial Disclosure Regarding Mr. Shelley’s Income

[67] Starting first with the allegation in the answer that Mr. Shelley misrepresented his income to be $150,000, I find that that allegation was false.

[68] Ms. Shelley, when she signed the answer, was very much aware that Mr. Shelley had disclosed his recent income history to her well before she signed the second agreement in 2012. Ms. Shelley admits in the agreed statement of fact (paragraph 75) that Mr. Shelley provided to her a breakdown of his salary and bonus on January 19, 2012 for her meeting the next day with Mr. Hersch, a lawyer at Harrison Pensa. The income disclosure that was provided was for the years 2009 to 2011 as follows:

	2009	2010	2011
Total	$142,194	$158,882	$172,556
Base	$128,000	$132,588	$144,000
Bonus	$14,194	$26,294	$28,556

[69] During his cross-examination, Mr. Shelley agreed that the only disclosure that he provided to Ms. Shelley prior to the execution of the second agreement was an email summarizing his 2009 to 2011 incomes. He also clarified that he did not forward his actual tax returns for those years.

[70] Ms. Shelley did not dispute the accuracy of the income information provided by Mr. Shelley. In fact, it appears that for 2011 Mr. Shelley disclosed income that was slightly higher than his actual line 150 income of $170,595.

[71] In cross-examination, Ms. Shelley was forced to admit that she knew that Mr. Shelley’s income was greater than $150,000 when she signed the second agreement and, further, Ms. Shelley admitted that the claim in her answer that Mr. Shelley had misrepresented his income was not true. As to the latter, the transcript reveals [1]:

Q. So despite the claims in your answer and claim where you allege that John did not provide his correct income or that he misrepresented or lied about his income that too, would not be true, right? A. When you put it like that, yes.

[72] Some further non-disclosure from Ms. Shelley also emerged. Despite signing an answer alleging that Ms. Shelley signed the second agreement “without legal advice,” Ms. Shelley did consult with Mr. Hersch on January 20, 2012, as verified in paragraph 75 of the agreed statement of fact. Also, Mr. Hersch had prepared a SSAG calculation for Ms. Shelley, filed as an exhibit at trial, that was based on Mr. Shelley having employment income of $170,000.

[73] The non-disclosure issue that emerges is that in her pleadings Ms. Shelley did not disclose that she had gone to see Mr. Hersch and that Mr. Hersch gave her a SSAG calculation.

[74] Further, those facts only surfaced in the current proceeding after Mr. Shelley located a copy of the SSAG calculations amongst his documents. Mr. Shelley had testified that he had received a copy of those SSAG calculations during the negotiations. Email correspondence between the parties suggests that Mr. Shelley was given a copy during a meeting between the parties on January 26, 2012.

[75] Ms. Shelley was cross-examined vigorously as to her failure to mention in her pleadings that she had met with Mr. Hersch and had obtained a DivorceMate (SSAG) calculation. It was apparent from Ms. Shelley’s cross-examination that she had not produced the DivorceMate calculation even to her own lawyer. The following exchange appears in the transcript [2]:

Q. You never produced the Divorcemate calculation, right? A. What do you mean I didn’t produce it? Q. You didn’t produce it? A. To whom, sorry? Q. To your lawyer, so your lawyer could give it to me. You didn’t produce it yourself, that you went to Harrison Pensa and had a Divorcemate calculation done? A. I didn’t think it was that important. Q. But you remembered that you did, didn’t you? A. Pardon? Q. You remembered that you did? You knew it was there, that you had it done? A. Yes. Q. You knew? A. Yes. Q. But we didn’t. Mr. Shelley didn’t know. He had to go rifling through his documents and produce it after the oral examinations that there was actual (sic) a Divorcemate calculation done. A. But he did have it. Q. You never produced it though, right? You’re the one raising the issue of the spousal support and child support saying that you didn’t have legal advice and you never produced the Divorcemate calculation from January 20th, 2012, did you? A. No, I’d given it to John way back whenever. Q. But we produced it in this lawsuit. Mr. Shelley produced it? A. Yes.

[76] Ms. Shelley’s response that she “didn’t think it was that important” is disingenuous. It was important information because it gutted the accusations in Ms. Shelley’s pleadings that Mr. Shelley misrepresented his income.

[77] When the DivorceMate calculation surfaced, Ms. Shelley changed her strategy. The “sands shifted.” Ms. Shelley now focused her attention on Mr. Shelley’s alleged non-disclosure of his pension. Ms. Shelley testified during cross-examination [3]:

Q. And in fact, the pension issue doesn’t come up until after it becomes clear that low and behold, Mrs. Shelley actually went to Harrison Pensa on January 20th, 2012 and gave them the income information and actually had a Divorcemate calculation based on a (sic) $170,000, right? A. The Divorcemate calculation had nothing to do with pensions. Q. Right, but you only raised the pension after it came to light that there was a Divorcemate calculation in existence, true? A. True.

[78] In relation to her consultation with Mr. Hersch (which Ms. Shelley testified was a free consultation), the day following that meeting, Ms. Shelley sent an email to Mr. Hersch (filed as an exhibit) which included Ms. Shelley thanking Mr. Hersch for “taking the time to talk to me,” adding that “it was a pleasure as well as very informative” (my emphasis).

[79] In this email, Ms. Shelley asked Mr. Hersch a number of follow-up questions, to which Mr. Hersch responded three days later, suggesting that it would be easier to discuss this verbally, asking Ms. Shelley to “... please call.” It is not clear on the evidence whether Ms. Shelley followed up on Mr. Hersch’s offer but, if not, it was apparent that she had the opportunity to do so at Mr. Hersch’s invitation.

[80] Ms. Shelley admitted during cross-examination: (a) that she maintained her position that she did not have Mr. Shelley’s correct income disclosure at the oral questioning that took place in June 2017; and (b) that it was only on October 4, 2017 (being the month before the trial started) that she finally admitted that she had received Mr. Shelley’s income disclosure on January 19, 2012.

B. Disclosure Regarding Mr. Shelley’s Deloitte Pension

[81] This issue was pursued vigorously by Ms. Shelley during the trial. It was her evidence that she was not aware that Mr. Shelley had a Deloitte pension at the time that she signed the second agreement. She accused Mr. Shelley of failing to disclose this asset.

[82] As the validity of both separation agreements was not in issue at this trial, Ms. Shelley was raising the pension non-disclosure as part of her claim for spousal support under s. 15.2. The essence of Ms. Shelley’s argument is that if she had known about Mr. Shelley’s Deloitte pension, and the financial security that it gave him, then Ms. Shelley would have sought more spousal support to give her better long-term financial security. Ms. Shelley submits that this non-disclosure is a material fact to consider in the Miglin analysis.

[83] Mr. Shelley agreed that, leading up to the second agreement, he did not provide Ms. Shelley with any disclosure about his Deloitte pension; that she did not ask for this information, so he did not give it.

[84] However, I find that context is important. Ms. Shelley sought to reopen the first agreement soon after it was signed. She was unhappy about the quantum and duration of spousal support. A pension is property, and property issues were not on the table.

[85] Ms. Shelley obtained legal advice. She asked for Mr. Shelley’s income for the last three years, which he provided promptly and accurately. As indicated previously, SSAG calculations were prepared by her lawyer, Mr. Hersch, to address spousal support. A party’s entitlement to a pension is not a variable that affects SSAG calculations.

[86] The first agreement stated, in relation to pensions: “RRSPs and Pensions are equal (or have been equalized) to time of separation.” The first agreement contained acknowledgements regarding each party’s obligation to obtain “independent legal counsel,” that the facts in the agreement “are true and accurate” and that each party has “general knowledge of the other’s affairs, assets and liabilities.”

[87] The reality of this case is that the parties had relatively modest assets at the time of separation. There was no dispute that Mr. Shelley entered into the Deloitte pension plan only in late 2008, about a year prior to separation.

[88] Mr. Shelley, at trial, filed a tabbed net family property statement, together with back-up documents attached. I find this net family property statement to be an accurate representation of each party’s net family property at date of separation. Ms. Shelley did not challenge this document’s accuracy; she agreed in cross-examination that this net family property statement “... was an accurate picture of the Shelley marriage.”

[89] The only assets of any significance were the matrimonial home (sold in 2011 and proceeds equally divided as discussed earlier) and each party’s RRSP - $43,636 for Mr. Shelley and $33,102 for Ms. Shelley.

[90] The Deloitte statement of pension benefits for the year 2009 indicated that, as at the date of separation, Mr. Shelley had 13 months of credited service and that he was not yet vested as 24 months of plan membership were required for vesting. The net family property statement disclosed only a modest value of $4,458 (rounded) for the Deloitte pension at date of separation, based on the attached Deloitte pension statement and also a brief actuarial report.

[91] Ms. Shelley was cross-examined on her earlier evidence that she did not know about Mr. Shelley’s Deloitte pension. It was suggested to Ms. Shelley during cross-examination that Mr. Shelley would testify that the parties talked about the pension “over the kitchen table” and that Mr. Shelley explained that there would be less money going into their bank account because of Mr. Shelley’s pension contributions. Ms. Shelley denied all suggestions that such conversations took place.

[92] Mr. Shelley testified in-chief that he told Ms. Shelley at the time that he is going into the pension plan effective December 2008 and that less money would be going into the bank account because money would be deducted for his pension contributions.

[93] On this conflict in the evidence, I prefer and accept Mr. Shelley’s evidence. I find as a fact that Ms. Shelley became aware of, and had knowledge of, Mr. Shelley’s pension when he told her in 2008 that he had joined the Deloitte pension plan.

[94] In making this finding, I have considered the evidence that the parties generally were open with each other about financial matters during their marriage. They maintained a joint bank account into which Mr. Shelley’s pay was deposited. In her evidence in-chief, Ms. Shelley testified that during their marriage Mr. Shelley was always very generous, that he was not someone who put her on a budget and that he would say things like “... my income is our income”; Ms. Shelley had a debit card and was able to access their joint account when required.

[95] Mr. Shelley added, during his evidence in-chief, that during the marriage there were “no secrets,” that “everything was joint.” Both parties did agree that Mr. Shelley had an account in his own name but that was only for employment related expenses that were reimbursed to Mr. Shelley by his employer.

[96] I find that the manner in which the parties shared financial information and dealt with their finances during the marriage was very consistent with the fact that Mr. Shelley would share with Ms. Shelley that he had joined the pension plan and that there would be an associated cost.

[97] I have considered also that both agreements refer to pensions. The wording in the first agreement has been discussed earlier; the second agreement, in paragraph 11.2, states:

The parties agree that neither party shall share in the other’s company pension plan through their employment, RRSP contributions throughout the marriage or any other pension available to each of them now or in the future.

[98] Finally, in preferring Mr. Shelley’s evidence, I have considered Ms. Shelley’s lack of credibility as discussed earlier, particularly the false statements in her pleadings accusing Mr. Shelley of misrepresenting his income.

[99] At trial, Ms. Shelley made much of the email exchange, filed as an exhibit, between herself and Mr. Shelley that took place in May 2013, over a year after the second agreement was signed. In the emails, Ms. Shelley tells Mr. Shelley that she has sought legal advice and that she is entitled to his 2010 to 2012 tax returns, including “full disclosure of assets.” Ms. Shelley also complained that she was “short changed of security via no pensions” and that she “has received legal advice as to her rights including a fair settlement.” Ms. Shelley stated that the only way private pensions can be split “is to know your assets.”

[100] Mr. Shelley’s email response had the following opening sentence:

I’ve always been willing to discuss matters, however there are no pensions to be discussed as there are no pensions!

[101] Ms. Shelley at trial seized on the phrase “... there are no pensions!” She submitted that Mr. Shelley denied that he had a pension when, in fact, there was a pension with Deloitte.

[102] During his cross-examination, in addressing the statement “... there are no pensions!”, Mr. Shelley testified [4]:

Q. You told her that there were no pensions? A. No pensions to be discussed was the intent of that e-mail. We were – after having two agreements that I went and had put together that Joanne negotiated and then six months or a year later the new volley of e-mails begins.

[103] During the course of the trial, it was apparent, at times, that Mr. Shelley harboured some measure of frustration. He thought that he had met Ms. Shelley’s requests, especially in the second agreement. However, in May 2013, he faced “a new volley of e-mails,” as he put it, and then four years later he was in a trial.

[104] Viewed in that light, and considering Mr. Shelley’s evidence as a whole, I find that it was Mr. Shelley’s intent to communicate to Ms. Shelley that he was not discussing pensions any further. I do agree that the wording used was sloppy and could be construed that he was denying the existence of the Deloitte pension.

[105] Also pertinent is that the May 2013 email exchange was subsequent to the signature of the second agreement and has no bearing on the financial disclosure exchanged during negotiations. Further, after the emails were exchanged in May 2013, there is no evidence to suggest that Ms. Shelley took any concrete steps to follow up on her request to “fairly split” the pension. Even when she did file her pleadings in the current proceeding, any claims in relation to setting aside the agreement (which were subsequently dismissed on consent, as discussed earlier) were restricted to the support provisions.

[106] Ms. Shelley cites Rick v. Brandsema, 2009 SCC 10, as to the duty of full disclosure:

[46] This contractual autonomy, however, depends on the integrity of the bargaining process. Decisions about what constitutes an acceptable bargain can only authoritatively be made if both parties come to the negotiating table with the information needed to consider what concessions to accept or offer. Informational asymmetry compromises a spouse’s ability to do so ... [citations omitted]

[48] Such a duty in matrimonial negotiations anchors the ability of separating spouses to genuinely decide for themselves what constitutes an acceptable bargain. It also helps protect the possibility of finality in agreements. An agreement based on full and honest disclosure is an agreement that, prima facie, is based on the informed consent of both parties. It is, as a result, an agreement that courts are more likely to respect. Where, on the other hand, an agreement is based on misinformation, it cannot be said to be a true bargain which is entitled to judicial deference.

[107] In the present case, neither party elected to provide a financial statement during the negotiation process leading to the second agreement.

[108] Mr. Shelley relies on Quinn v. Keiper, 2007 ONSC 45714, 87 O.R. (3d) 184. In this case, the court states that formal disclosure by way of a financial statement prior to executing an agreement is not necessary to meet the obligation of disclosure; that parties are expected to use due diligence in ascertaining the facts and that a party cannot fail to ask correct questions and then rely on lack of disclosure: para. 48.

[109] Ms. Shelley submits that Quinn v. Keiper may be of limited use as it was decided before Rick v. Brandsema. I do not accept Ms. Shelley’s submission.

[110] As will become apparent later in these reasons, Ms. Shelley had ample opportunity to seek information, including pension information, from Mr. Shelley but she elected not to do so. The negotiations, prima facie, were about variation of spousal support where income disclosure is important, and was provided.

[111] Further, a finding has been made that Mr. Shelley told Ms. Shelley about his pension in 2008. From his perspective, Mr. Shelley relied, correctly, on that fact.

[112] I find, in the particular circumstances of this case, that Mr. Shelley ought not to be criticized either for failing to remind Ms. Shelley that he had a Deloitte pension or failing to provide Ms. Shelley with a value of that pension. I find as a fact that Ms. Shelley knew that Mr. Shelley had a Deloitte pension plan.

C. The Negotiation Process Regarding the Second Agreement

[113] After it became apparent that Ms. Shelley wanted to change the first agreement, the parties did engage between themselves in a robust discussion process, including emails and meetings. Much of the detail regarding the negotiations is included in the agreed statement of fact paragraphs 12 to 36, and it is not necessary to repeat all those details in these reasons.

[114] Both parties wanted to continue to deal with each other during negotiations, rather than through lawyers, to avoid legal expenses. When Ms. Shelley mentioned in an email to Mr. Shelley that she was getting some legal advice, Mr. Shelley responded that he was fully supportive with her getting the necessary advice to make an informed agreement (paragraph 19 agreed statement of fact).

[115] The negotiations continued to the point that on February 17, 2012, Ms. Shelley forwarded an email to Mr. Shelley, the relevant portion of which stated:

$5000 to equalize on mostly the car + furniture. $2500 a month for 18 more years. The midpoint on your calculations (based on $160k) is $2750. $2500 is less than halfway between the below minimum you offered at $2300 & the mid point. So in grade terms, A, B, C, D, its a C+, instead of a C-/D. [my emphasis] …

[116] In his response on February 22, 2012, Mr. Shelley was agreeable to Ms. Shelley’s proposal, stating that it would be contained in a revised agreement that Ms. Shelley would have time to review.

[117] On February 23, 2012, Ms. Shelley responded via email, stating in part:

John, If I were to accept this offer I am doing myself out of a lot of money in terms of your future income ….. I know this and aside from resorting to a lawyer have to swallow it. … [my emphasis]

[118] Mr. Shelley then had his lawyer, Ms. Bennett, prepare a separation agreement, incorporating the agreed terms; Mr. Shelley signed four copies on March 8, 2012, all of which were forwarded to Ms. Shelley by Ms. Bennett via letter dated March 8, 2012; this letter included the following as verified in the agreed statement of fact (paragraph 40):

It is my preference for you to have the contract reviewed with counsel for independent legal advice so that we can be assured that you understand the agreement and the implications of signing it meaning that it is a binding once and for all settlement of the issues.

[119] Ms. Shelley did not sign this version of the second agreement (hereinafter at times referred to as “the first draft”). Ms. Shelley made some handwritten comments on one of the copies of the first draft and the copy with the comments was filed as an exhibit. It is not clear on the evidence as to who wrote each of the comments but, in my view, it is not necessary to make that determination. However, Ms. Shelley did agree that she handwrote a number of amendments on the first draft and sent it back to Mr. Shelley’s counsel before the second agreement was signed (paragraph 139 agreed statement of fact).

[120] There is no dispute that Ms. Shelley wanted changes to the first draft. The parties (see paragraphs 43 and 45 agreed statement of fact) agree that the sharing of s. 7 expenses was changed from a ratio of “65/35” in the first draft to “80/20” at Ms. Shelley’s request. On this point, Ms. Shelley testified during cross-examination that she and Mr. Shelley “had back and forth discussions about that.” Also, the first draft provided that a decrease in Mr. Shelley’s income of more than $20,000 will constitute a material change in circumstances. The parties agreed that this clause was removed at Ms. Shelley’s request. Ms. Shelley added during cross-examination that she wanted that clause removed because she wanted “consistent” spousal support.

[121] A key change made to the first draft dealt with the variation clause.

[122] The final executed version of the second agreement (as discussed earlier) contained a variation clause in paragraph 6.6(c) and a similar clause, in respect of termination of spousal support, in paragraph 7.1(e). Both of these variation clauses, as indicated earlier, were narrow in scope and limited to circumstances “… such as unexpected injury, disability or the like.”

[123] In contrast, the two corresponding variation clauses contained in the first draft (paragraph 6.7(e) and 7.1(e)) were not limited in scope – the words “… such as unexpected injury, disability or the like” were not included.

[124] On the first draft, the words “like what” were handwritten beside paragraph 7.1(e), which contained the variation clause in relation to termination. The agreed statement of fact (paragraph 63) confirms that these words were written by Ms. Shelley “which is why the wording was changed to add examples such as unexpected injury, etcetera.” Further, the agreed statement of fact (paragraph 65) confirms that the wording of the second agreement in paragraph 7.1(e) was after the revision requested by Ms. Shelley.

[125] Notwithstanding the agreed statement of fact, Ms. Shelley denied in cross-examination that she wrote the words “like what.” When confronted with the agreed statement of fact, Ms. Shelley testified that she did not know how to respond to that, insisting that it was not her writing.

[126] This was the second time that Ms. Shelley gave evidence contradicting what she had agreed to in the agreed statement of fact, and it was not helpful to her credibility.

[127] Ms. Shelley was pressed during cross-examination that she wanted the narrower wording in the variation clause. Ms. Shelley testified that it was possible that she did and perhaps she discussed it with Mr. Shelley.

[128] It is noteworthy that paragraph 140 of the agreed statement of fact includes the following:

One of the Respondent’s [Ms. Shelley’s] requested amendments to the Amending Agreement was that the conditions under which spousal support could be terminated be narrowed, indicating that the material changes in circumstances should specify circumstances “such as unexpected injury.”

[129] I am satisfied on the evidence, and I find as a fact, that Ms. Shelley wanted the changes that were made to the variation clause to narrow the circumstances permitting variation of spousal support, both in paragraph 6.6(c) and paragraph 7.1(e) of the second agreement.

[130] As previously mentioned, Ms. Shelley in her pleadings alleged that the second agreement was signed under time pressure, while she was in a vulnerable state, and that Mr. Shelley took advantage of her. I find that none of these allegations were proven at trial.

[131] Ms. Shelley testified during cross-examination that after changes were made to the draft agreement, that she had the final version for at least two weeks. It was Ms. Shelley’s evidence that she read it and that she signed both the agreement and the attached waiver of independent legal advice. The latter refers to Ms. Shelley choosing not to retain a lawyer despite receiving the letter from Ms. Bennett.

[132] Ms. Shelley also conceded that both the second agreement and the waiver of independent legal advice were witnessed by her neighbour and that Mr. Shelley was not present when those documents were signed by her.

[133] I find that Ms. Shelley signed the second agreement and the waiver of independent legal advice voluntarily, without pressure or coercion by Mr. Shelley, and that Ms. Shelley had reasonable and sufficient opportunity to consider and reflect on both the draft version of the second agreement and the final version of the second agreement.

[134] Further, I find that there is no credible evidence to support the allegation that Ms. Shelley was in a vulnerable state and that Mr. Shelley took advantage of her. Rather, Mr. Shelley in his email correspondence, and Ms. Bennett in her letter, encouraged Ms. Shelley to obtain independent legal advice.

[135] I turn to the issue of independent legal advice. Ms. Shelley submits in the written portion of her closing argument that she amended her answer to remove the words “without legal advice” because it was factually incorrect as she had indeed received some advice from Mr. Hersch. Ms. Shelley clarified that her argument was that she “did not have sufficient legal advice” (emphasis in the original, being Ms. Shelley’s written submissions).

[136] I find that Ms. Shelley benefited from her consultation with Mr. Hersch. Ms. Shelley described the consultation as an “enlightening meeting” in her email to Mr. Shelley on January 21, 2012.

[137] Whether or not Ms. Shelley received what she would characterize as “sufficient” legal advice, Ms. Shelley testified during cross-examination that it was her decision not to consult with a lawyer regarding the draft version of the second agreement; it was also her evidence that she had an opportunity to consult a lawyer and that she was encouraged to do so.

[138] Ms. Shelley testified that she did not go to a lawyer because she could not afford it. However, as discussed earlier, during the exchange of emails 13 months after the second agreement was signed, Ms. Shelley stated that she had consulted with Harrison Pensa, the same firm that Mr. Hersch was with, and that this firm was providing her with legal rights regarding a fair settlement.

[139] Ms. Shelley made no attempt during trial to explain how it was that she was able to afford a consultation at that time but not 13 months earlier.

[140] Ms. Shelley gave no evidence about the potential cost of having a lawyer meet with her to review the second agreement. Mr. Hersch, after all, had met with Ms. Shelley in January 2012 without charging for his services. There was no evidence as to whether, for example, Ms. Shelley had spoken to Mr. Hersch about the potential cost of reviewing the second agreement.

[141] Accordingly, Ms. Shelley’s allegation that she could not “afford” to see a lawyer, without more evidence, is self-serving and deserving of little or no weight, especially when Ms. Shelley did consult with a lawyer some 13 months after the second agreement was signed.

[142] I find on the evidence that Ms. Shelley made a conscious and voluntary decision not to have the second agreement reviewed by a lawyer; that she was prepared to accept the terms that she had negotiated even though the agreement was a “C+” as she had stated; and even though “... aside from resorting to a lawyer ...” she would “have to swallow it.”

The Miglin Analysis

A. Preliminary Observations

[143] Ms. Shelley’s claim for spousal support is not a review, nor a request “to vary” the terms of the second agreement. It is an original application to determine spousal support judicially where the existing separation agreement is a factor to be considered: see the reasons of D.L. Corbett J. to that effect in Geishardt v. Ahmed, 2017 ONSC 5513, at para. 141.

[144] The parties assisted the court by preparing various SSAG calculations either filed as exhibits or included with their written submissions.

[145] In the 2016 Revised User’s Guide [5] to the SSAG, the authors discuss the interaction between the SSAG and spousal support agreements. The following helpful insight is included in paragraph 4 dealing with agreements:

a) It is now fairly well understood that the SSAG, being advisory only, cannot be used to reopen spousal support agreements; b) A final agreement, for example, waiving time limited spousal support or fixing a lump sum, will preclude the application of the SSAG unless the agreement can be set aside or overridden under the legal framework found in contract law, provincial legislation or the Divorce Act; c) Where there is an initial application under s. 15.2 of the Divorce Act in the face of a final agreement, “the two-part Miglin test applies to determine the weight to be given to the agreement and whether a court may ‘override’ (not set aside) the agreement” [emphasis in the original]; d) At the first stage of the Miglin analysis, SSAG ranges can be used to assess whether the agreement was in substantial compliance with the objectives of the Divorce Act at the time of negotiation; and e) If one gets to the second stage of Miglin, “the SSAG ranges for the parties’ current circumstances can offer some insight into whether there has been any ‘departure from the range of reasonable outcomes anticipated by the parties, in a manner that puts them at odds with the objectives of the Act.’ A result that differs significantly from the SSAG, particularly one that leaves the support claimant in circumstances of economic hardship, might support a finding that such a result could not have been reasonably contemplated by the parties.”

[146] As discussed earlier, Mr. Shelley submits that the effect of the orders amending Ms. Shelley’s answer and dismissing her claims to set aside and/or vary the separation agreements should have the effect of precluding her ability to raise similar issues in support of her claim pursuant to s. 15.2 of the Divorce Act.

[147] I am not prepared to construe the effect of the court orders and the amended answer as narrowly as suggested by Mr. Shelley. For example, Ms. Shelley points to the trial scheduling endorsement form dated September 18, 2017, filed as an exhibit, where changes were made in relation to the outstanding issues to take into account the dismissal of the claims to set aside and/or vary the separation agreements, while still noting that evidence will be called with respect to “ILA” (independent legal advice).

[148] I find that Ms. Shelley is not precluded from calling evidence to support her claim under s. 15.2 just because that same evidence could have been relevant to issues in respect of claims that have been dismissed. More broadly, I am of the view that the orders and the amendments to Ms. Shelley’s pleadings do not preclude Ms. Shelley from pursuing any arguments relevant to her claim for spousal support pursuant to s. 15.2.

B. The Divorce Act

[149] When making orders for spousal support, the Divorce Act requires the court to take into consideration the factors in s. 15.2(4) and provides that the order should take into account the objectives in s. 15.2(6):

(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including (a) the length of time the spouses cohabited; (b) the functions performed by each spouse during cohabitation; and (c) any order, agreement or arrangement relating to support of either spouse.

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

C. Miglin, Stage 1 – the Circumstances of Execution of the Agreement

(i) What factors is the court required to consider?

[150] The main focus of the inquiry at this point is summarized in Miglin, at para. 81:

81 It is difficult to provide a definitive list of factors to consider in assessing the circumstances of negotiation and execution of an agreement. We simply state that the court should be alive to the conditions of the parties, including whether there were any circumstances of oppression, pressure, or other vulnerabilities, taking into account all of the circumstances, including those set out in s. 15.2(4)(a) and (b) and the conditions under which the negotiations were held, such as their duration and whether there was professional assistance.

[151] Further, at para. 82: (a) the court should not presume a power imbalance, or vulnerability on the part of one party; (b) the court should not presume that an apparently stronger party took advantage of the vulnerability of the other; and (c) there must be evidence to warrant the court’s finding that the agreement should not stand on the basis of fundamental flaw in the negotiations.

(ii) Discussion: the Circumstances of the Execution of the Second Agreement

[152] The circumstances of the execution of the second agreement have been discussed in detail. There was no proof of circumstances suggesting oppression, pressure or other vulnerabilities. Assuming that Mr. Shelley was the “stronger party,” which seems consistent with Ms. Shelley’s theory of the case, there is no proof that Mr. Shelley “took advantage” of Ms. Shelley.

[153] In terms of the duration of the negotiations, they started at least in January 2012 and the second agreement was finalized three months later. The second agreement reflected the increase in quantum and duration of spousal support requested by Ms. Shelley. When the first draft was prepared, there were changes suggested by Ms. Shelley that were accommodated by Mr. Shelley, including narrowing the variation clause.

[154] Regarding independent legal advice, this too has been discussed in detail. Ms. Shelley did have legal advice to assist her with the negotiation process. Though Ms. Shelley did not have legal advice after the second agreement was drafted, her evidence explaining why she failed to do so was not persuasive. In the circumstances of this case, if Ms. Shelley did receive “insufficient” legal advice, as she claims, then that is a circumstance for which she is responsible.

[155] The issue of financial disclosure also has been discussed in detail and there are no identified flaws in that process that would undermine the negotiation process and the integrity of the second agreement.

[156] I conclude that there is no basis either to interfere with the second agreement, or to discount the weight to be attributed to it, based on the circumstances of the negotiation and execution of that agreement.

D. Miglin, Stage 1 – Substance of the Agreement

(i) What is the court required to examine?

[157] The next stage is summarized in Miglin in para. 84. Only a significant departure from the general objectives of the Act will warrant the court’s intervention on the basis that there is not substantial compliance with the Act. Paragraph 84 states:

84 Where the court is satisfied that the conditions under which the agreement was negotiated are satisfactory, it must then turn its attention to the substance of the agreement. The court must determine the extent to which the agreement takes into account the factors and objectives listed in the Act, thereby reflecting an equitable sharing of the economic consequences of marriage and its breakdown. Only a significant departure from the general objectives of the Act will warrant the court’s intervention on the basis that there is not substantial compliance with the Act. The court must not view spousal support arrangements in a vacuum, however; it must look at the agreement or arrangement in its totality, bearing in mind that all aspects of the agreement are inextricably linked and that the parties have a large discretion in establishing priorities and goals for themselves.

[158] When examining the substance of the agreement, the court must ask itself whether there is substantial compliance with the Divorce Act; in determining substantial compliance, it must be considered whether the agreement is a significant departure from the general objectives of the Act, “which necessarily include as well as support considerations in s. 15.2, finality, certainty, and the invitation in the Act for parties to determine their own affairs”: Miglin, at para. 85.

[159] Section 9(2) of the Divorce Act emphasizes the positive duty on counsel to advise clients of alternatives to litigation. Section 9(2) shows Parliament’s intention to promote negotiated settlements: Miglin, at paras. 53-54.

[160] In her written closing argument, Ms. Shelley submitted that s. 9(2) is of no relevance to the court’s decision in this case. In light of the discussion in Miglin regarding s. 9(2), I reject Ms. Shelley’s submission that s. 9(2) is not relevant.

(ii) Discussion – the Substance of the Second Agreement and the Extent to which it takes into Account the Factors and Objectives in the Divorce Act

[161] I start with the “condition, means, needs and other circumstances” of the parties and the factors listed in s. 15.4(a), (b) and (c). I consider first the parties’ financial circumstances at date of separation.

[162] The net family property statement filed by Mr. Shelley was discussed earlier. The parties’ financial circumstances on separation were modest. Mr. Shelley’s net family property was $81,900 and Ms. Shelley’s was $67,300 (both amounts rounded). This generated a modest equalization payment of just under $7,300.

[163] In reality, each party’s net family property represented his or her net worth at date of separation as there was no disclosure of any exclusions or date of marriage assets. To the extent that the parties may have had any assets at date of marriage, there was no dispute that those assets would have been modest.

[164] Although no equalization payment was payable pursuant to the first agreement, in the second agreement Ms. Shelley received a payment of $5,000 pursuant to her request during the negotiation process to equalize the car and furniture.

[165] There is no doubt that the parties’ property was fairly and equitably divided, even without considering that Mr. Shelley made an overpayment in child support and that he also over contributed to Ms. Shelley’s RRSP.

[166] Although no financial disclosure was filed by either party as to his or her net worth at the date that the second agreement was signed in July 2012, the parties did provide income disclosure from date of separation to the time of trial.

[167] Mr. Shelley’s income for 2009 to 2011 was summarized earlier. From 2012 to 2016 inclusive, Mr. Shelley’s employment income was a little over $170,000 in 2012 and increased steadily each year to $199,366 in 2016. (Although Mr. Shelley’s line 150 income in 2012 was $180,800, this included $10,371 in RRSP withdrawals.) Ms. Shelley’s employment income from 2009 to 2016 increased steadily, with the largest increments occurring after Ms. Shelley commenced fulltime employment. In 2009, Ms. Shelley’s income was $16,134 and, in 2016, it had increased to $53,374.

[168] Each party filed five financial statements after this proceeding commenced up to and including trial.

[169] At the time of trial, Mr. Shelley’s most recent financial statement sworn September 20, 2017 showed a net worth of $295,008. The main reason for his net worth increase from the date of separation was the value of the Deloitte pension that was estimated to be $221,114 as at December 31, 2016. No back up documents were filed to explain how this pension value was quantified. However, Mr. Shelley agreed during cross-examination that his Deloitte pension was increasing from year to year. Further, a portion of Mr. Shelley’s net worth increase was due to his RRSPs that had increased in value to $166,476.

[170] At the time of trial, Mr. Shelley had re-partnered and his partner was earning $6,230 per month as disclosed in Mr. Shelley’s financial statement (Schedule B). In his last financial statement, Mr. Shelley disclosed an income of $199,365 and expenses of $199,800. This produced a modest deficit and he confirmed that in his cross-examination. Mr. Shelley agreed in cross-examination that his expenses included $3,125.75 per month for legal fees and that at some point those expenses would cease.

[171] Given Mr. Shelley’s acknowledgement of the very modest deficit that his financial statement disclosed, it is difficult to put much weight on the expenses disclosed by Mr. Shelley because those expenses did not include the over $30,000 per year that he was paying in spousal support. It also appears that none of his other financial statements disclosed the spousal support as an expense, nor did the earlier financial statements disclose the child support that he was paying before the child support payments ceased.

[172] Mr. Shelley was not questioned on this apparent discrepancy. I attach little weight to the expense portion of Mr. Shelley’s financial statements.

[173] Ms. Shelley’s most recent financial statement sworn October 3, 2017 showed a net worth of $197,000. The increase from her date of marriage net worth is attributable primarily to the equity in her home purchased after the date of separation and the increased values of her RRSPs at $119,316. Ms. Shelley testified that for a period of time she was contributing $1,000 a month to her RRSPs but that stopped when the child support payments stopped. There was some question whether Ms. Shelley’s net worth was higher, as cross-examination revealed that she had recently disclosed the value of her home to be $300,000 to her TD Bank advisor, whereas her financial statement showed a value of $225,500.

[174] In that financial statement, Ms. Shelley disclosed $84,344 in income and expenses of $106,163. Ms. Shelley claimed that she used her savings to fund some of her expenses.

[175] Ms. Shelley had received approximately $30,000 in January 2014 as a gift from her mother and it was placed into a savings account. Ms. Shelley indicated that she funded her deficit from savings but her most recent financial statement disclosed that there was little money left in savings and that this account had been depleted due to legal fees.

[176] As a result, on the evidence, it is unclear how Ms. Shelley currently is funding her disclosed deficit of over $20,000 annually as her cash assets, other than her RRSPs, are minimal. Further, some of the deficits shown in previous financial statements are suspect as Ms. Shelley failed to include in her income the child support that she was receiving. I find the expense portion of Ms. Shelley’s current financial statement to be of questionable reliability.

[177] The foregoing demonstrates that since the date of separation, both parties have had increases in income and net worth.

[178] Regarding the factors in s. 15.4(a) and (b), the length of cohabitation of 20 years and Ms. Shelley’s assumption of childcare responsibilities discussed earlier adds a compensatory element to her entitlement for spousal support.

[179] Section 15.2(4)(c) includes a consideration of any agreement relating to spousal support.

[180] I will focus the discussion on the second agreement. Both parties wanted an agreement. They did not want to incur legal costs. Finality was an important consideration.

[181] There were negotiations through email and in person; there was “give and take.” Each party achieved results. Mr. Shelley wanted spousal support to have a termination date; the parties settled on 2029 as Ms. Shelley wanted five more years from what was contained in the first agreement. Ms. Shelley was aware that $2,500 per month indexed was a “C+” and she did not want to incur the costs of hiring a lawyer to review the second agreement.

[182] Mr. Shelley achieved some protection as his right to vary the second agreement included retirement but not before age 60. Mr. Shelley will turn age 60 in 2026 so, in theory, he could seek to vary the support at that time; however, the likelihood of whether Mr. Shelley will do so is not something that can be assessed on the evidence.

[183] Both parties made submissions about whether Ms. Shelley was entitled to share in Mr. Shelley’s post-separation income.

[184] Had this been a s. 15.2 claim without a pre-existing agreement, that issue would have been squarely before the court. I do adopt the analysis of McGee J. in Garnet v. Garnet, 2016 ONSC 5922 (Ont. S.C.J.), at paras. 105-106, that the sharing of post-separation income increases is not automatic, that it is necessary to establish a compensatory basis for the claim.

[185] Although Ms. Shelley’s compensatory claim would have given her an ability to pursue spousal support based on Mr. Shelley’s post-separation income increases, the reality is that Ms. Shelley agreed not to do so. Litigants are open to agree via contract to exclude post-separation income increases for the purpose of spousal support, as in the present case where both parties’ incomes were fixed at $150,000 and $25,000.

[186] I turn to the consideration of the SSAG. As discussed earlier, the SSAG are not determinative but are a factor to take into account.

[187] It is important to look at the SSAG during periods of time when the “with child support” formula applies, when the “adult child” support formula applies, and finally when the “without child support” formula applies.

[188] At the time that the second agreement was signed, the “with child support” formula applied for the SSAG calculations. There was shared custody of the children. The SSAG calculations prepared by Mr. Hersch in January 2012 (using the “with child support” formula”) used $170,000 for Mr. Shelley’s income and $27,000 for Ms. Shelley’s income (which is very close to the parties’ actual incomes for 2011). Mr. Shelley did file a SSAG calculation, Ex. E, using the exact incomes for 2011. That SSAG calculation had spousal support ranging from a low of $2,515 to a high of $3,417. These ranges were almost exactly the same as the ranges shown in the calculation received from Mr. Hersch.

[189] This demonstrates that without indexing, the $2,500 per month spousal support agreed to in the second agreement is very marginally outside the low end of the range; however, with indexing, the spousal support exceeds the low end of the range, having increased to $2,680 in 2017.

[190] For informational purposes, both parties provided SSAG calculations [6] using the with child support formula with the incomes capped at $150,000 and $25,000 as per the second agreement. Both calculations show that spousal support set out in the second agreement falls in the mid-range.

[191] The foregoing illustrates that while Ms. Shelley received child support (until April 2017) and using the capped incomes provided for in the second agreement, that the $2,500 indexed spousal support falls in the mid-range of the SSAG. Substituting for actual incomes at the time the second agreement was signed, the agreed to spousal support falls inside the low-range after several years of indexing.

[192] The other aspect of spousal support is duration. At 20 years, the SSAG show “an indefinite (unspecified) duration, subject to variation and possibly review.” It is important to note that “indefinite” does not mean permanent and it does not mean that support will continue indefinitely at the level set by the formula: see Spousal Support Advisory Guidelines July 2008, section 7.5.2. In the present case, the parties have agreed that spousal support will not extend past 20 years – one year for every year of cohabitation. Twenty years was something that Ms. Shelley specifically requested during negotiations leading up to the second agreement.

[193] The 20 year duration speaks to the parties wishing to have finality. If there was no upper limit, then that could later be a source of either negotiation or, failing agreement, litigation. The 20 year duration can be viewed as taking into consideration the compensatory element of the spousal support.

[194] The situation then changes when the child support payments to Ms. Shelley stopped at the end of April 2017. It would appear that the child support payment at that time was in the range of $1,162 per month based on the January 2016 agreement referred to earlier.

[195] A triggering event regarding Ms. Shelley’s claim for spousal support occurred when the spousal support stopped. Ms. Shelley takes no issue with the spousal support received up to and including April 30, 2017, as she seeks increased spousal support for the period commencing May 1, 2017.

[196] Pursuant to the Revised User’s Guide for the SSAG [7], paragraph 14, the authors address the issue of “cross-over.” The authors state that “when child support ends, if there is a continuing entitlement to spousal support, it will be necessary to cross-over from the with child support formula to the without child support formula.” It is noted that cross-overs typically involve medium and long range marriages with children as is the situation in the present case.

[197] Change in child support can, in appropriate circumstances, be considered a material change in circumstances for the purpose of applying for variation of a spousal support order: see, for example, Hersey v. Hersey, 2016 ONCA 494, at para. 15.

[198] Ms. Shelley submits that because the second agreement does not permit variation of spousal support if child support changes, or terminates, that she is deprived from receiving a substantial amount of spousal support to which she would have been entitled but for the agreement. Ms. Shelley raises this argument as part of her Miglin analysis.

[199] Accordingly, Ms. Shelley’s SSAG calculation (Ex. F) uses current incomes of $199,367 and $53,375 for Mr. Shelley and Ms. Shelley, respectively, and shows a spousal support range at a low of $3,650 to a high of $4,866. In that calculation, Ms. Shelley uses the “adult children” formula.

[200] Ms. Shelley points to the current indexed amount of spousal support of $2,680 per month and submits that this is substantially below the guideline range. Ms. Shelley submits that the high range of $4,866 a month is appropriate support to order, although Ms. Shelley does have alternate submissions for lower support depending on the court’s finding as to the proper incomes to use for the SSAG and the proper range within the SSAG.

[201] There are a number of aspects regarding Ms. Shelley’s submission that need to be considered.

[202] First, Mr. Shelley submits that even assuming that the current incomes should be used, the calculations by Ms. Shelley were incorrect because they neglected to take into account ongoing s. 7 expenses for the child Mark. I agree with that submission. Accordingly, for comparison, Mr. Shelley has filed Ex. J. which uses the same incomes (with some negligible rounding), uses the “adult child” formula but includes $7,411 paid by Mr. Shelley for post-secondary expenses which consist of the $3,411 for tuition in 2017 and Mark’s rent of $500 a month for eight months commencing May 2017. The “adult child support” formula is a simple formulaic approach based on the gross income difference. In the formula, the s. 7 expenses are required to be “grossed-up,” as shown in Ex. J, and it is this “grossed-up” amount that is deducted from a support payor’s gross income. As a result of including the s. 7 expenses, the SSAG ranges are lowered to $3,424 at the low end to $4,565 at the high end.

[203] Further, the calculations provided by Mr. Shelley are somewhat overly generous to Ms. Shelley because those calculations apportion the s. 7 expenses between Mr. Shelley and Ms. Shelley, with Ms. Shelley having to pay s. 7 expenses ranging from $207 per month to $236 per month depending on the low-mid-high ranges of spousal support. I say this is overly generous because the evidence is that Ms. Shelley is not paying those expenses. It would have been more accurate to override the apportionment of s. 7 expenses to allocate 100% to Mr. Shelley to reflect the reality of the situation.

[204] Although calculations have not been provided in evidence as to the effect of apportioning 100% of the s. 7 expense to Mr. Shelley, it is clear that the spousal support ranges would decrease further because the additional grossed-up s. 7 expenses would decrease Mr. Shelley’s gross income. Ms. Shelley’s gross income then would increase and the gross income difference on which spousal support is payable would decrease.

[205] It is necessary also to consider what incomes to use in order to take into account the cross-over effect. For reasons set out earlier, there is no basis to depart from the capped incomes agreed to by the parties.

[206] In her written submissions, Ms. Shelley includes a SSAG calculation using the without child support formula and showing the capped incomes of $150,000 for Mr. Shelley and $25,000 for Ms. Shelley. This calculation also has no s. 7 expenses and presumes that neither child is a dependant entitled to support. This would be the case presumably once Mark finishes post-secondary education, which is currently not the case. This calculation shows SSAG ranges from a low of $3,125 to a high of $4,167. Accordingly, the current indexed support of $2,680 is $445 below that SSAG range using the capped incomes.

[207] However, the current situation is that Mark is incurring s. 7 expenses which means SSAG ranges would have to be reduced further. Mr. Shelley has included a SSAG calculation in his written submissions using the capped incomes, but including $10,000 post-secondary expenses. The $10,000 amount is a reasonable estimate on a go-forward basis as it would include rent for 12 months and a tuition payment similar to the one made in 2017. This produces SSAG ranges from a low of $2,773 to a high of $3,697. Again, that calculation is overly generous because it apportions the s. 7 expenses between both parties. For reasons discussed earlier, the actual situation is better represented by apportioning 100% of the s. 7 expenses to Mr. Shelley which would reduce the SSAG ranges further.

[208] There was no evidence as to how long Mark is expected to attend university.

[209] Regarding the SSAG and putting the foregoing into perspective, as at time of trial, of the 20 year post-separation period, Ms. Shelley took no issue with spousal support for the first 8 of those 20 years while the with child support formula applied. While Mark remains in school, and using the capped incomes and adult child support formula with s. 7 expenses, the current spousal support of $2,680 is less than $100 below the minimum range, not taking into account future indexing and any reduction in the SSAG ranges if 100% of the s. 7 expense is allocated to Mr. Shelley.

[210] If Mark leaves school after a four year degree, then for the remaining 10 years the spousal support will be outside the low end of the range using the capped incomes, but not dramatically so, and this difference will shrink with indexing.

[211] I consider the objectives contained in s. 15.2(6).

[212] Regarding subparagraph (a), in terms of economic advantages or disadvantages arising from the marriage or its breakdown, the parties’ property has been equitably shared. Ms. Shelley had an economic disadvantage because she had to leave her employment for a number of years to assume the childcare responsibilities. This enabled Mr. Shelley to gain the advantage of being able to work and enhance his career and earning potential.

[213] The 20 year duration and the quantum of spousal support is some recognition of the economic disadvantage experienced by Ms. Shelley from the breakdown of the marriage and also from her role assumed in the marriage where she did not work outside the home for a number of years. Mr. Shelley gained an economic advantage in being able to pursue his career and his obligation to pay support is some recognition of the economic advantage.

[214] In relation to subparagraph (b), this in my view speaks to Ms. Shelley’s entitlement to compensatory support. There is some recognition of the compensatory element of support given the duration of the spousal support.

[215] In relation to subparagraph (c), in terms of relieving economic hardship arising from the breakdown of the marriage, the agreement provides some recognition of that objective in providing for spousal support for 20 years.

[216] Regarding subparagraph (d), in terms of promoting the self-sufficiency of each spouse within a reasonable period of time, Mr. Shelley has always been self-sufficient. In relation to Ms. Shelley, an aspect of the agreement that promotes self-sufficiency is the fact that an increase in Ms. Shelley’s income from the $25,000 set out in the agreement is not a trigger for a decrease in spousal support.

[217] A court should be loath to interfere with a pre-existing agreement unless it is convinced that the agreement does not comply substantially with the overall objectives of the Divorce Act: Miglin, at para. 46.

[218] In Miglin, the following is stated regarding the discretion of trial judges to substitute their own view of what is required:

45 … The fact that judicial and societal understandings of spousal support have changed since the release of Pelech v. Pelech, 1987 SCC 57, [1987] 1 S.C.R. 801] and the adoption of admittedly competing factors in s. 15.2(6) does not lead to an unfettered discretion on the part of trial judges to substitute their own view of what is required for what the parties considered mutually acceptable. In this respect, we agree in principle with Wilson J.’s comments in Pelech, supra, at p. 853:

Where parties, instead of resorting to litigation, have acted in a mature and responsible fashion to settle their financial affairs in a final way and their settlement is not vulnerable to attack on any other basis, it should not, in my view, be undermined by courts concluding with the benefit of hindsight that they should have done it differently.

[219] In relation to the SSAG, for the last six of the first eight years post-separation while Ms. Shelley was receiving child support, the spousal support is within the mid-range using the capped incomes, and near the low end of the range using actual incomes earned in 2011. While it is true that when all child support obligations end at a point in time currently unknown that the spousal support will be below the low end of the range, it is necessary to consider the amount of which the spousal support is below the minimum when the incomes are capped, and that the SSAG are not determinative and are one factor to consider.

[220] Also, in relation to Ms. Shelley’s inability to vary the agreement by applying the cross-over formula, that submission must be assessed in terms of the expectations of the parties at the time the agreement was made. It was foreseeable that the children would not always be dependants. The agreement addresses specifically in paragraph 4.14 the circumstances where child support ends. The fact that the second agreement did not provide a specific provision for variation once child support was no longer payable can be viewed as reflective of a desire for finality.

[221] Recognizing that litigants are encouraged to settle, recognizing that agreements are not perfect and are the products of negotiations, and considering the factors and objectives set out in the Divorce Act, I conclude that at the time of the formation of the second agreement that the substance of the agreement complied substantially with the general objectives of the Divorce Act. I cannot find that there is a significant departure from the general objectives of the Act. There is, in my view, no basis to warrant the court’s intervention with any aspect of the second agreement.

E. Miglin, Stage 2

(i) What is required in the stage 2 analysis?

[222] The court is required to ask, viewed from the time the application is made, whether the applicant has established that the agreement no longer reflects the original intention of the parties and whether the agreement is still in substantial compliance with the objectives of the Act: Miglin, at para. 4.

[223] An agreement that is not impugned under both parts 1 and 2 of the Stage 1 analysis should be afforded great weight. Miglin, at para. 87, states in part:

87 Where negotiation of the agreement is not impugned on the basis set out above and the agreement was in substantial compliance with the general objectives of the Act at its time of creation, the court should defer to the wishes of the parties and afford the agreement great weight. …

[224] In Miglin, at para. 91, it is emphasized that separation agreements, although different from commercial contracts, are contracts nonetheless and that parties must take responsibility for the contract that they execute. Paragraph 91 states in part:

[91] … Parties must take responsibility for the contract they execute as well as for their own lives. It is only where the current circumstances represent a significant departure from the range of reasonable outcomes anticipated by the parties, in a manner that puts them at odds with the objectives of the Act, that the court may be persuaded to give the agreement little weight. …

(ii) Discussion – Stage 2 Analysis Regarding the Second Agreement

[225] At the time of the application, reliance was placed by Ms. Shelley on the fact that she was no longer receiving child support. She sought to replace the lost child support with additional spousal support. Further, as discussed above, although Ms. Shelley was no longer receiving child support, the fact is that Mark is still a dependant and there are ongoing s. 7 expenses being paid solely by Mr. Shelley.

[226] At the time of the application, as compared to the date of the second agreement, Ms. Shelley’s income had increased from the date that the second agreement was signed as she was working fulltime and Ms. Shelley’s net worth had increased.

[227] I find that the second agreement did contemplate the situation before the court at the time of the application. The current circumstances do not represent a significant departure from the range of reasonable outcomes anticipated by the parties at the time that the second agreement was signed.

[228] There are no circumstances existing at the time of the application that were inconsistent with the circumstances contemplated by the second agreement and the expectations of the parties in relying on that agreement.

[229] I find there is no basis on which to make an order to override any aspect of the agreement.

Mr. Shelley’s Motion for a Non-Suit

[230] At the conclusion of Ms. Shelley’s case, Mr. Shelley filed his motion for a non-suit. The procedure for non-suit motions is described Chandra v. Canadian Broadcasting Corp., 2015 ONSC 5303, at paras. 21 and 22:

21 In civil cases, with or without a jury, the established practice is that the defendant must elect whether or not to call evidence: Ontario v. O.P.S.E.U. (1990), 37 O.A.C. 218 (Ont. Div. Ct.), at p. 226. If the defendant elects to call evidence, the judge reserves on the nonsuit motion until the end of the case.

22 The test for nonsuit is whether there is any evidence upon which a jury, acting judicially, could find in favour of the plaintiff: Michelle Fuerst & Mary Anne Sanderson, Ontario Courtroom Procedures, 3rd ed. (Markham: LexisNexis Canada Inc., 2012) at p. 490. In jury cases, whether a defendant elects to call evidence or not, the trial judge should receive the jury's verdict before ruling on the motion: Lederman et al., at para. 5.18.

[231] Mr. Shelley elected to call evidence and the decision on the non-suit motion was reserved.

[232] The test on a motion for a non-suit is a high threshold. Considering all the evidence, and considering also the discussion in paragraphs 147 and 148 of these reasons, I am not satisfied that Mr. Shelley has met the test. Mr. Shelley’s motion for a non-suit is dismissed.

Evidentiary Issue at Trial

[233] During the re-examination of Ms. Shelley, she was asked whether she was aware that Mr. Shelley had a Deloitte pension plan at the time that she signed her answer.

[234] An objection was taken to that question as being improper reply. This generated rather lengthy submissions, during which Ms. Shelley was requested to leave the courtroom.

[235] I allowed Ms. Shelley to answer the question and Ms. Shelley testified that she was not aware of the Deloitte pension plan when she signed her answer.

[236] I indicated at the time of my ruling that I would review later all the evidence in order to determine whether the question was proper reply and, if not, that I would ignore the evidence given in reply.

[237] Given the factual finding discussed in these reasons, that Ms. Shelley was aware of the Deloitte pension plan, I find that the evidence as to whether Ms. Shelley was aware of Mr. Shelley’s Deloitte pension at the time that she signed her answer is not relevant. Accordingly, in deciding this case, I have not considered Ms. Shelley’s evidence on re-examination.

Final Order

[238] For the foregoing reasons, I make the following final order:

1. Mr. Shelley’s motion for a non-suit is dismissed.
2. Ms. Shelley’s application for spousal support is dismissed.
3. If the parties are unable to settle costs, then the parties may make written costs submissions forwarded to the trial coordinator; Mr. Shelley’s written submissions shall be served and filed within three weeks, Ms. Shelley’s responding submissions shall be served and filed within three weeks thereafter and Mr. Shelley’s reply, if any, shall be served and filed within one week thereafter. Costs submissions shall not exceed 4 typed pages (2 typed pages in reply), double spaced, plus copies of any dockets, bills of costs, offers and authorities.

“Justice Victor Mitrow” Justice Victor Mitrow

Released: August 7, 2018

COURT FILE NO.: FD151/16 DATE: August 7, 2018 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: John Anthony Shelley Applicant

• and - Josephine Anne Shelley Respondent REASONS FOR JUDGMENT MITROW J.

Released: August 7, 2018

Footnotes:

[1] Transcript, page 91, November 20, 2017 [2] Transcript, pages 38-39, November 20, 2017 [3] Transcript, pages 37-38, November 20, 2017 [4] Transcript, page 119, November 21, 2017 [5] Spousal Support Advisory Guidelines, April 2016 – Spousal Support Advisory Guidelines: The Revised User’s Guide, prepared by Professor Carol Rogerson and Professor Rollie Thompson [6] Ex. D for Mr. Shelley, and tab A of Ms. Shelley’s written submissions. [7] Ibid Spousal Support Advisory Guidelines, April 2016 – Spousal Support Advisory Guidelines: The Revised User’s Guide, prepared by Professor Carol Rogerson and Professor Rollie Thompson