Court File and Parties

COURT FILE NO.: 58646/99-1 DATE: 2022-03-28 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Linda Ann Spirito, Applicant AND Robert Spirito, Respondent

BEFORE: The Honourable Mr. Justice Marc Smith

COUNSEL: Eric Letts, Counsel for the Applicant Marc Coderre, Counsel for the Respondent

HEARD: March 8, 2022, by video conferencing

Reasons for Decision

M. Smith J

[1] The Respondent brings a Motion to Change the order of Polowin J. dated January 20, 2003, regarding payment of spousal support. Specifically, the Respondent seeks an order terminating his spousal support obligations, rescinding all arrears of spousal support, and cancelling his obligation to maintain life insurance or any security connected with his spousal support obligations.

[2] The Applicant opposes the motion on the basis that there has been no change of circumstances.

[3] The issues to be determined are:

a. Is there a material change in circumstance meriting a review of spousal support? b. If so, what is the appropriate variation award?

[4] For reasons that follow, the Respondent’s motion is granted.

Background

[5] The parties married on April 12, 1975. They had two children. They separated in 1999 and their divorce was finalized on May 15, 2000.

[6] At the time of the parties’ separation, the children were not dependents for child support purposes.

[7] The Respondent remarried in 2000. He has a 19-year-old daughter with his second spouse, Theresa Spirito.

[8] The parties entered into Minutes of Settlement on July 10, 2002. The relevant terms of these Minutes of Settlement are as follows:

PREAMBLE

(e) The Wife is employed with BreconRidge and earns $29,000.00 a year. (f) The Husband is employed by and owns Vincent Spirito and Sons Ltd., 1202731 Ontario Ltd. and 1270565 Ontario Ltd. and earns $90,000.00 together with imputed income as a result of indirect benefits, bringing his total income, for support purposes, to approximately $175,000.00 a year.

3. UNLIMITED TIME SUPPORT

3.1 Commencing on March 7, 2002, and on the 7th day of each subsequent month, the Husband will pay to the Wife for her support $4,000.00 per month until the death of the Wife.

4. LIFE INSURANCE

4.1 The Husband shall obtain life insurance on his own life, in an amount sufficient to cover his obligations for spousal support, and for so long as he shall be responsible to make payments for the support of the Wife pursuant to this Agreement.

5. MATERIAL CHANGE IN CIRCUMSTANCES

5.1 Only paragraphs 3 and 4 may be varied if there is a material change in circumstances, even if such change was foreseeable or foreseen by the parties at the time the agreement was executed. If such change occurs, the Husband or Wife seeking the variation will give to the other written notice of the variation he or she is seeking, and Husband and the Wife will then confer personally or through their respective lawyers to settle, what, if any various should be made.

[9] As part of the agreement between the parties, the Respondent transferred to the Applicant his interest and equity in the matrimonial home and cottage, as well as his interest in a 1998 truck. In addition, the Respondent paid to the Applicant an equalization payment of approximately $160,000 by way of a RRSP rollover.

[10] The only terms of the Minutes of Settlement that were incorporated into the final order of Polowin J. dated January 20, 2003 pertained to the spousal support.

[11] The Respondent paid his spousal support obligations for approximately 15 years. During the summer of 2018, the Respondent experienced some significant financial difficulties. In June 2018, the Respondent’s company made an assignment in bankruptcy.

[12] At the end of July 2018, the Respondent secured employment as an Estimator Project Manager with Le Groupe Raymond, earning $85,000 per annum.

[13] In October 2018, the Respondent filed for personal bankruptcy.

[14] The Respondent commenced his Motion to Change on October 3, 2018.

[15] In 2019, the Respondent was still employed with Le Groupe Raymond, and he earned an annual salary of $117,393.80. In 2020, there was an initial slowdown in the construction industry because of Covid-19, resulting in a slight decrease in salary to $111,000. Then, on February 12, 2021, the Respondent was terminated, and he received two weeks of severance pay, totalling $3,000.

[16] Since his termination in February 2021, the Respondent has not earned any employment income. He has not been able to secure new employment. The Respondent receives employment insurance benefits in the amount of $2,166.67 (until July 2022), old age security pension in the amount of $642.25, and a pension income annuity of $99.00 per month.

Legal Principles

[17] Section 17(4.1) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) provides that before the court makes a variation order in respect of a spousal support order, the court shall satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order.

[18] The factors to be considered in a variation proceeding involving spousal support are set out at s. 17(7) of the Divorce Act:

a. Recognize any economic advantages or disadvantages to the former spouses arising from the marriage or its breakdown. b. Apportion between the former 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 former spouses arising from the breakdown of the marriage. d. In so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time.

[19] The leading case with respect to varying spousal support is L.M.P. v. L.S., [2011] 3. S.C.R. 775. The Supreme Court of Canada sets out the two-step process. First, the threshold in s. 17(4.1) of the Divorce Act regarding the change of circumstance must be met. The change must be a “material one, meaning a change that, if known at the time, would likely have resulted in different terms.” Second, any variation to be made must consider the four objectives of spousal support enumerated in s. 17(7) of the Divorce Act: see paras. 29, 32 and 50.

[20] The term “indefinite support” does not mean permanent support. It is subject to the normal process of variation and review on a material change in circumstance: see Reisman v. Reisman, 2014 ONCA 109, at paras. 30 and 31.

Issue #1 - Is there a material change in circumstance meriting a review of spousal support?

[21] The Applicant takes the position that a material change in circumstances has not occurred.

[22] The Applicant argues that at the time the Respondent filed his Motion to Change in October 2018, his income was not significantly different than the negotiated imputed income in the Minutes of Settlement. The Respondent was in arrears of approximately $8,235.00.

[23] The Applicant further says that the bankruptcies allowed the Respondent to wipe out his debts and maintain a robust lifestyle. It is submitted by the Applicant that the Respondent’s household expenses in 2018 are similar to those in 2022.

Analysis

[24] At the time that the spousal support order was made, the parties’ wealth was directly connected to the Respondent’s business, and it represented the only source of income for the Respondent. When the Respondent ceased earning income from the business in the summer of 2018 because of the bankruptcy, that was not only a significant event, but a long lasting one. No further revenues were to be generated from the business because it closed permanently.

[25] Shortly after the bankruptcy of the business, again during the summer of 2018, the Respondent was able to secure employment with Le Groupe Raymond, earning $85,000 per year. This salary was materially different than the $175,000 income that was used to determine the spousal support award.

[26] In or around the time that the Motion to Change was commenced by the Respondent in October 2018, he declared personal bankruptcy. This was another material event that occurred. It is noteworthy that the Respondent’s personal bankruptcy did not erase a debt owed for unpaid taxes to the Federal government and the Quebec government, in the amount of $128,206 and $132,000, respectively.

[27] The changes to the Respondent’s employment, business and personal situation are directly connected to the bankruptcy of the Respondent’s business. This bankruptcy acted as a catalyst that resulted in a clear material change in circumstance. Also, there is no evidence that these changes were deliberate or made in bad faith by the Respondent.

[28] I reject the Applicant’s argument that in or around the time that the Motion to Change was commenced, the Respondent’s lifestyle was still robust. The evidence before me paints a very different story and the Applicant has not presented any evidence to the contrary.

[29] In sum, I find that a material change in circumstances has occurred, meriting a review of the spousal support.

Issue #2 - What is the appropriate variation award?

[30] The Applicant urges the court to take a contextual and holistic approach to this case. The Applicant says that the purpose of the spousal support order was not only to relieve the financial difficulties of the Applicant, but it was to compensate her for the financial disadvantage that she experienced during the relationship. The Applicant lives a frugal life and has an ongoing need to spousal support.

[31] The Applicant reminds the court that the order of Polowin J. provided for lifelong spousal support.

[32] The Applicant says that if the court accepts that there has been a material change in circumstance and a decline in the Respondent’s income, the court could take a stepped approach to reducing the support.

Analysis

[33] The order of Polowin J. for indefinite support does not equate to permanent support. Because of the material change in circumstances, the support order is reviewable.

[34] From 2003 until 2018, the Respondent made his spousal support payments to the Applicant. As a result of his financial difficulties and the bankruptcies, he fell into arrears. When the Motion to Change was commenced, the Respondent was in arrears of approximately $8,235. Today, his arrears total is approximately $185,000.

[35] According to the Respondent’s Financial Statement dated March 2, 2022, his debts exceed his assets. The Respondent’s largest asset is a home that he owns with his wife and the equity is estimated to be $180,000. The Respondent’s debts include $46,000 in bank debt and $260,206 in unpaid taxes, owed to the Federal and Quebec governments.

[36] To the Respondent’s credit, he has made efforts to substitute the income lost from his business. However, because of his retirement age, the impact of the pandemic, and the current state of the market, the chances of finding suitable employment currently are quite low.

[37] The Respondent’s monthly expenses are $7,217.09, which he equally shares with spouse. With his current monthly income of $2,908.64, he is almost able to meet his shared portion of expenses. As of July 2022, the Respondent will no longer be receiving employment insurance benefits. His income will be limited to old age security pension and CPP benefits.

[38] The Respondent’s spouse was laid off because of Covid-19. She is currently earning $1,100 every two weeks in employment insurance benefits.

[39] The Respondent finds himself in a precarious financial situation. The Respondent will shortly have difficulty meeting his monthly expenses and his ability to service his debts appear to be very limited.

[40] Conversely, the Applicant’s submissions that she has an ongoing need for continued spousal support and she lives a frugal life is not supported by the evidence. The Applicant filed an 11-paragraph affidavit that is of limited assistance. The Applicant deposes that she retired in August of 2021, and her sources of income are a RIF and pension income. The Applicant claims that she lives a modest life and struggles financially. That is the extent of the Applicant’s affidavit evidence regarding her frugal lifestyle and the necessity for ongoing spousal support.

[41] The Applicant’s Financial Statement sworn on March 1, 2022 reveals that she earns a monthly income of $3,555.93. Her total assets amount to $845,555.27, comprising of a mortgage free house, a mortgage free cottage, and an RRSP. The Applicant’s only debt is a line of credit totalling $17,000.

[42] The parties do not find themselves in comparable financial circumstances. The Respondent is penniless, while the Applicant has accumulated wealth. Exceptionally, notwithstanding that the Respondent stopped paying spousal support since the summer of 2018, the Applicant did not amass significant debt.

[43] I find that the Applicant has not demonstrated a need for continued spousal support. The Applicant has been able to achieve self-sufficiency and has significant capital to meet her ongoing needs.

[44] Having regards to the parties’ vastly different financial circumstances and that the Respondent has reliably paid support for 15 years, I find it appropriate and reasonable to terminate spousal support and cancel all arrears. The Respondent’s obligation to maintain life insurance or any security connected with his spousal support obligations ceases immediately.

Conclusion

[45] The Respondent’s motion is granted.

[46] I encourage the parties to reach an agreement on costs. If the parties cannot agree on costs, the Respondent may serve and file his written submissions (limited to three pages, excluding the Bill of Costs and Offers to Settle) within 30 days of these Reasons for Decision. The Applicant may then serve and file her written submissions (limited to three pages, excluding the Bill of Costs and Offers to Settle) within 30 days of the receipt of the Respondent’s submissions. Thereafter, and if necessary, the Respondent may serve and file reply submissions (limited to one page) within 15 days of receipt of the Applicant’s submissions.

M. Smith J Released: March 28, 2022