COURT OF APPEAL FOR ONTARIO

DATE: 20000802

DOCKET: C32927

RE: DAVID HARRIS and 358207 ONTARIO LTD. (Appellants)

v. JUDITH HARRIS (Respondent)

BEFORE: McMURTRY C.J.O., MORDEN and ROSENBERG JJ.A.

COUNSEL: David M. Harris,

for the appellants

E. Jane Murray,

for the respondent

HEARD: June 28, 2000

On appeal from the judgment of Mr. Justice P. Lalonde dated September 3, 1999

ENDORSEMENT

[1] This is an appeal by David Harris from a judgment of Lalonde J. dismissing his application to vary the spousal support term of a divorce judgment granted by Charron J. in 1991. The judgment of Charron J. incorporated the terms of minutes of settlement agreed to by the parties. Mr. Harris sought to vary paragraph 3 of the judgment, which provides as follows:

THIS COURT ORDERS AND ADJUDGES that commencing on the first day of January, 1991 and on the first day of each subsequent month, the Petitioner shall pay to the Respondent for her support and maintenance, the sum of FIVE THOUSAND DOLLARS ($5,000.00), until January 1st, 2021 or until the Respondent dies. If the Petitioner should die before the Respondent prior to January 1st, 2021, his obligation to pay spousal support pursuant to the Minutes of Settlement, will survive his death and this obligation will be a first charge on his estate. There shall be no variation to these terms of support whatsoever at the instance of either the Petitioner or the Respondent. [Emphasis added.]

[2] The Minutes of Settlement also resolved a number of other issues including equalization of family property. Mr. Harris was required to make an annual equalization payment of $25,000 ending in 2002. He has continued to make these payments. However, in January 1998, he reduced the spousal support from $5,000 to $2,000. Mr. Harris claimed that Mrs. Harris had agreed to this reduction. Mrs. Harris denies this and she took garnishment proceedings. As a result, Mr. Harris brought the application to vary.

[3] Mr. Harris argues that there have been material changes in circumstances since the 1991 judgment and that the spousal support should be varied pursuant to s. 17 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.). He relies upon two changes: his own reduced income and Mrs. Harris’s bankruptcy. The latter can be summarily dealt with. On the application by Mr. Harris to reduce the spousal support, Mrs. Harris’s bankruptcy is not a “material” change in circumstances.

[4] Mr. Harris’s reduced income is more problematic. The parties present two different pictures of what occurred at the time of the 1991 settlement. Mrs. Harris claims that she believed her husband had hidden offshore assets. She gave up her right to complete financial disclosure, however, in return for the certainty of the spousal support for the next thirty years. It was important to her that the parties had agreed not to vary this support. She further points out that Mr. Harris agreed to this support order notwithstanding that in his financial statement at the time he claimed to be running a sizeable monthly deficit and that, under the divorce judgment, he was obligated to pay this support until he was in his eighties.

[5] Mr. Harris claims that the 1991 settlement was premised on his ability to continue in active employment. He offers no explanation for how he could continue to make the support payments at a time when he was no longer employed.

[6] Mr. Harris is an accountant. Until 1984, he was a shareholder and officer of a company involved in international construction. In 1984, he retired and sold his shares in the company. He transferred the proceeds from the sale of his shares to 358207 Ontario Ltd. Following his retirement, he worked as an independent consultant in the international construction business. His other source of income was investment income earned by 358207 Ontario Ltd.

[7] In his affidavit, Mr. Harris says that in the early 1990’s there was a substantial drop in activity in the international construction business, particularly in the Caribbean where he had the most work experience. He says that the industry has never recovered and that at age 60 he has not been able to find any other type of employment. His business income has dropped from between $70,000 to $90,000 in the early 1990s to $20,000 in 1997. He says he had no business income in 1998. He was not cross-examined on his affidavit.

[8] In her affidavit, Mrs. Harris claims that her children have told her that Mr. Harris has over $4 million in offshore accounts and that he said she would never receive any part of this money. She suspects that there was some kind of side deal for the sale of his shares in the company and that the proceeds of this side deal are held in the Cayman Islands. In cross-examination, Mrs. Harris admitted that she has no hard evidence to support these claims. There is, however, evidence that Mr. Harris has transferred his interests in some real property to his current wife. He says it was for proper consideration to enable him to meet his obligations to Mrs. Harris. She suspects the consideration was inadequate and is part of an attempt to put his assets beyond the reach of any enforcement proceedings she might take. She says that Mr. Harris and his new wife have maintained the same standard of living despite his claim that his business income has declined.

[9] On the basis of this record, Lalonde J. found that there had been no material change in circumstances. He reasoned as follows:

I conclude that the husband knew what he was doing in 1990 when he voluntarily signed the minutes of settlement. He had the money, was an astute businessman and had the benefit of expert legal advice. What he complains has happened to him now was known in 1990. The financial resources in 1990 that the husband controlled meant he could meet this obligation.

[10] We have carefully reviewed the record in this case and we have concluded that there is no basis for interfering with the decision of Lalonde J. That decision, although based upon affidavit evidence, is entitled to deference: Hickey v. Hickey (1999), 1999 691 (SCC), 46 R.F.L. (4th) 1 (S.C.C.) at 21.

[11] As the application judge pointed out, a material change is a change such that, if known at the time, would likely have resulted in different terms: B. (G.) v. G. (L.) (1995), 1995 65 (SCC), 15 R.F.L. (4th) 201 (S.C.C.) at 271. The possibility of swings in the economy, particularly in the construction industry, was foreseeable. It was also plainly foreseeable that, at a certain point, Mr. Harris would no longer be employed, having retired from active employment, but still obligated to make the support payments. He obviously thought that he would have sufficient resources to continue to make the spousal support payments, or, put another way, that these changes in his ability to earn income were not material to his support obligations. The appellant is an accountant and businessman. These possibilities must have occurred to him. He agreed to the spousal support and to the non-variation clause. In our view, it was open to the application judge to find that there was no material change in circumstances.

[12] The appellant also sought leave to appeal the costs order. He argues that the parties should bear their own costs. Mrs. Harris was entirely successful before Lalonde J. We see no basis for interfering with the application judge’s discretion.

[13] The respondent agrees that paragraph 3 of the judgment of Lalonde J. should be deleted.

[14] Accordingly, subject to deleting paragraph 3 of the judgment, the appeal is dismissed with costs.

Signed: “R.R. McMurtry C.J.O.”

“J.W. Morden J.A.”

“M. Rosenberg J.A.”

We need not decide whether the more stringent test of a radical, unforeseen change applies because of the non-variation clause in the agreement. See Santosuosso v. Santosuosso (1997), 1997 15688 (ON SCDC), 27 R.F.L. (4th) 234 (Ont. Div. Ct.).