COURT OF APPEAL FOR ONTARIO
CITATION: Elmgreen v. Elmgreen, 2016 ONCA 849
DATE: 20161114
DOCKET: C59879
Cronk, Rouleau and Huscroft JJ.A.
BETWEEN
Constance Marie Georgette Larouche Elmgreen
Applicant
(Appellant/Respondent by way of cross-appeal)
and
Jens Peter Elmgreen
Respondent
(Respondent/Appellant by way of cross-appeal)
James R. Webster, for the appellant/respondent by way of cross-appeal
Jens Peter Elmgreen, acting in person
Heard: September 22, 2016
On appeal from the judgment of Justice Lydia M. Olah of the Superior Court of Justice, dated April 9, 2015.
Cronk J.A.:
Introduction
[1] This is the latest proceeding in lengthy litigation arising from the breakdown of the parties’ marriage in 2004. Two matters are now before this court:
(1) an appeal by the appellant, Constance Marie Georgette Larouche Elmgreen (the “Wife”), from those parts of the summary judgment granted in favour of the respondent, Jens Peter Elmgreen (the “Husband”), on April 9, 2015, varying the existing spousal support arrangements between the parties established by the consent order of Magda J. of the Superior Court of Justice, dated October 24, 2005 (the “Consent Order”); and
(2) a cross-appeal by the Husband from those parts of the summary judgment: i) dismissing his motion to set aside or rescind the Consent Order; and ii) setting aside a domestic contract between the parties dated July 16, 1985 (the “Marriage Contract”) and, in the alternative, declaring that the Husband is estopped from asserting a claim that the Marriage Contract governs the parties’ post-separation rights and obligations.
[2] For the reasons that follow, I would allow the appeal, require the Husband to pay spousal support indefinitely in the amounts set out in these reasons, and dismiss the cross-appeal.
Background in Brief
A. Marriage
[3] The Wife met the Husband in 1983 while she was living and working as a barmaid in her home province of Quebec. The parties married on July 17, 1985, after cohabiting for approximately one year. At the time of the marriage, the Wife was 24 years old, had little facility in the English language, limited workplace skills, and a grade 10 education. The Husband was 42 years of age. On the motion judge's findings, he was a worldly, multilingual aviator who was then employed as a commercial pilot.
[4] After the marriage, the parties resided in Cameron, Ontario. They had one child, a daughter born on January 15, 1991, who is now 25 years of age. Child support is not in issue in these proceedings.
[5] The Wife was a full-time homemaker throughout the marriage. Apart from a brief period in 2003 when she worked on a nearby highway construction project, the Wife did not work outside the home after marriage. The Husband worked as a commercial pilot until the spring of 1996, when he lost his pilot’s licence. After losing his licence, he received disability insurance payments and, at age 60, retirement pension income.
B. Marriage Contract
[6] The parties entered into the Marriage Contract on July 16, 1985, the day before their wedding. It is a two-page document consisting of eight paragraphs. It contains the following provisions concerning spousal support:
Further, the parties acknowledge that there is to be no provisions [sic] for support for either party and further both parties accept this provision in lieu of any statutory rights provided.
Further provided that in the event of separation or divorce after 15 years, the wife shall be entitled to 25% of the husband’s net income by way of support in addition to an equal division of the assets acquired during the time of the marriage. Further, the wife elects to accept this provision in lieu of any statutory rights provided.
Further, the provision for support is to terminate should the wife remarry or live with another man.
[7] The Marriage Contract contemplated that the parties would receive independent legal advice regarding the agreement. Paragraph 8 reads:
The parties hereto further agree that they will have been given independent legal advice in connection with the making of this agreement and in connection with the terms agreed upon between the parties as of the date of the signing hereof.
C. Separation and Settlement
[8] The parties separated in January or February 2004, after almost 20 years of marriage. The Wife was then 43 years old, while the Husband was 60 years old.
[9] On October 14, 2005, the Husband offered to settle the parties’ post-separation financial and property issues, the Wife accepted his offer, and the accepted offer was incorporated in Minutes of Settlement and approved by the court under the Consent Order. At the time of the settlement, both parties were represented by counsel.
[10] As I will discuss, the Husband challenges the enforceability of the Consent Order on the basis that he allegedly did not sign the Minutes of Settlement and, on instructions by him to his lawyer, his offer to settle was to be held in abeyance pending resolution of his claims that the Wife and her lawyer had engaged in improper conduct.
[11] I will return to this challenge when addressing the issues raised in the cross-appeal. At this point, I note that the Consent Order had its origins in the Husband’s October 14, 2005 offer to settle, as accepted by the Wife and incorporated into the Minutes of Settlement. In his offer to settle, the Husband offered to pay the Wife an equalization payment in the sum of $185,000 and monthly spousal support in the amount of $2,200 commencing October 1, 2005. The support payments were subject to a material change in circumstances and review after five years. The Consent Order mirrored these terms regarding spousal support.
[12] Within days of his offer to settle, the Husband took issue with the settlement and the services provided to him by his lawyer. Nevertheless, he paid the equalization payment and, for a period of about eight years, the monthly spousal support contemplated by the Consent Order.
D. Litigation
[13] After the settlement, the Husband twice sued his matrimonial lawyer for alleged negligence and breach of fiduciary duty, leading to protracted litigation between them. Following a three-week trial in the Superior Court of Justice in May and June 2011, his first action against his former solicitor was dismissed. The Husband appealed to this court. That appeal and the Husband’s subsequent application for leave to appeal to the Supreme Court of Canada were both dismissed: Elmgreen v. Evans, 2013 ONCA 624, leave to appeal refused, [2013] S.C.C.A. No. 480.
[14] About three years later, in March 2014, the Husband commenced a second negligence action against his former solicitor. In December 2014, on a motion for summary judgment by the solicitor, the second action was also dismissed. The Husband’s appeal to this court from that dismissal was in turn dismissed: Elmgreen v. Evans, 2016 ONCA 682.
[15] In the meantime, in August 2009 and while his first action against his former solicitor was in progress, the Husband moved in the Superior Court for an order rescinding the Consent Order, determining the validity of the Marriage Contract, and requiring the Wife to provide full financial disclosure. The court addressed the issue of financial disclosure and deferred the balance of the motion pending the determination of the Husband’s action against his former solicitor.
[16] On October 22, 2014, the Husband moved in the Superior Court for summary judgment concerning the issues raised in his outstanding August 2009 motion, including an order rescinding or setting aside the Consent Order, among other relief. In his materials in support of his motion, the Husband also sought an order varying the spousal support provisions of the Consent Order based on a material change in circumstances.
E. Parties’ Financial Circumstances at Date of Separation
[17] According to the motion judge’s reasons, the parties conceded at the hearing of the motion that, as of the date of separation, the Husband’s annual income consisted of pension income in the amount of $80,000 and the Wife’s income was $5,000. Before this court, the Wife disputes the annual income attributed to the Husband, claiming that his actual income was approximately $97,000 when they separated.
[18] At or about the date of the parties’ separation, the Wife began to cohabit with Robert J. Moore, a beef cattle farmer who lived on a neighbouring farm. Mr. Moore had limited income and had paid an equalization payment to his own wife, from whom he had recently separated, in the approximate amount of $102,000 by mortgaging his matrimonial home and farmland. On cohabitation, the Wife and Mr. Moore shared their respective incomes and expenses, ran Mr. Moore’s farm and raised horses together. They were still cohabiting on this basis ten years later, at the time of the hearing before the motion judge.
[19] In late 2007, the Wife obtained minimum wage employment at a local Tim Hortons restaurant. Her annual income from employment in the years 2010 to 2013 ranged from approximately $17,580 to $22,750.
[20] Commencing in 2010, the Wife began a horse boarding business at the farm she shares with Mr. Moore. The Wife maintained that this business was designed to assist the parties’ daughter, by providing a business she could run. This effort to assist the daughter failed. However, as I will detail later in these reasons, it required the Wife to report her income and expenses related to the horse boarding business for income tax purposes.
F. Motion Judge’s Decision
[21] The motion judge treated the Husband’s 2009 and 2014 motions as a combined motion for summary judgment. She granted partial judgment in his favour, by reducing his spousal support obligation retroactively and terminating spousal support as of a set future date. Specifically, the motion judge granted the following relief:
Effective November 1, 2010, the Husband’s monthly spousal support obligation was reduced from the sum of $2,200 per month to $1,422 per month;
Effective November 1, 2011 and continuing until October 1, 2016, the Husband’s monthly spousal support obligation was further reduced to $1,219 per month; and
Effective November 1, 2016, the Husband’s spousal support obligation was terminated.
[22] In granting this relief, the motion judge imputed annual income to the Wife in the amount of $30,000 and annual income to the Husband in the amount of $80,000. The effect of her decision was that, as of the date of her ruling, the Wife owed the Husband an approximate $15,000 overpayment of spousal support and, effective November 1, 2016, the Husband was relieved of any further obligation to pay spousal support.
[23] The motion judge denied the remaining relief sought by the Husband. She declined to set aside the Consent Order and held, in effect, that the Marriage Contract is unenforceable and does not govern the parties’ post-separation rights and obligations.
Issues
[24] There are two main issues on the appeal:
(1) Did the motion judge err by retroactively reducing the Husband’s spousal support obligation and terminating it entirely, effective November 1, 2016?
(2) If the answer to (1) is “yes”, what is the appropriate remedy in the circumstances?
[25] There is one issue on the cross-appeal:
(1) Did the motion judge err by refusing to rescind or set aside the Consent Order and by holding that the Marriage Contract does not govern the post-separation rights and obligations of the parties?
Analysis
A. Appeal
[26] The Wife attacks the motion judge’s support ruling on multiple grounds. In my view, it is unnecessary for the disposition of this appeal to consider all the grounds advanced by the Wife. I am satisfied that, in imputing annual income to the Wife and Mr. Moore, the motion judge misinterpreted the contents of their income tax returns. She relied on her misapprehension of their returns to anchor her support ruling. Moreover, she provided no clear notice to the parties of her concerns regarding the returns, or of her intention to impute income to the Wife and Mr. Moore in reliance on those concerns. Finally, she also failed to factor changes in the Husband’s annual income into her spousal support analysis. In light of these errors, I conclude that her spousal support ruling is fatally flawed.
(1) Income Imputation to the Wife and Mr. Moore
[27] The Husband argued before the motion judge that, because he had paid spousal support to the Wife for a lengthy period, he should be relieved of the obligation to pay any further spousal support. In the alternative, he sought a reduction in his monthly spousal support payments based on a material change in circumstances.
[28] In order to determine whether the Husband had established a change in circumstances sufficient to warrant variation of his spousal support obligation, the motion judge undertook a detailed review of the Wife’s income tax returns and those of Mr. Moore for the years 2004 to 2013. Based on this review, she held, at pp. 31-32, that:
the Wife and Mr. Moore had been a fiscal team since 2004;
they had reduced their incomes from their horse and farming operations as reported in their annual tax filings by claiming personal expenses as deductions, the full value of which should be included in their respective incomes for support purposes;
they had been living on a combined income greater than that reported by them for income tax purposes, utilizing the spousal support paid by the Husband to support their joint lifestyle; and
the Wife had used her equalization payment from the Husband to fund renovations to the home she shared with Mr. Moore, to pay off Mr. Moore’s home mortgage, and by writing off the interest on that mortgage against her own income, as well as that of Mr. Moore.
[29] The motion judge concluded that a change in circumstances had occurred after the date of the Consent Order by reason of the manner in which the Wife and Mr. Moore had structured their financial and living arrangements, as described above. Further, in the motion judge’s view, this change was material because the Wife’s income had increased from $5,000 (date of separation income) to $17,000 - $21,200 (income in years following separation), her capital asset position had improved and her relationship with Mr. Moore had proven to be long-term and founded on the joint sharing of incomes and expenses.
[30] The motion judge therefore held that this was an appropriate case in which to apply a ‘step down’ approach to spousal support, that is, a gradual reduction in the quantum of spousal support payments, leading to a final termination of the Husband’s spousal support obligation.
[31] I accept that, on the evidence before the motion judge, a material change in the parties’ circumstances did occur after the date of the Consent Order. In particular, as I have already said, the Wife commenced steady employment at a Tim Hortons restaurant in late 2007. Based on her 2013 income tax return, her employment income in 2013 approximated $22,750. The Wife’s overall circumstances had also improved since separation as she had acquired an interest in the property she shares with Mr. Moore and she had been enjoying the benefits of income and expenses pooled with those of Mr. Moore.
[32] That said, I agree with the Wife’s submission that the motion judge erred in her interpretation and use of the Wife’s and Mr. Moore’s income tax returns, leading her to further err in her calculation of the annual incomes to be imputed to the Wife and Mr. Moore for spousal support purposes.
[33] Based on her review of the Wife’s and Mr. Moore’s income tax returns, the motion judge concluded that they had understated their respective annual incomes by claiming personal expenses as deductions against their horse boarding and farm income, the full value of which should be imputed to them as income for spousal support purposes. The motion judge held that annual income in the amount of $30,000 should be imputed to the Wife for each of the years 2010 to 2013 and annual income should be imputed to Mr. Moore for the same years, in sums ranging from $30,000 (2010) to $41,000 (2013).
[34] The difficulty with this approach in this case is that it rested on the motion judge’s misinterpretation of the contents of the Wife’s and Mr. Moore’s income tax returns. The following examples will suffice to make this point.
[35] When considering the Wife’s income for 2010, the motion judge stated, at p. 30:
In 2010, [the Wife’s] employment income was $17,579.37. Her Employment Insurance income was $1,176, and she received $26,400 in spousal support. She also had a farm income in excess of $12,000. I did not use that $12,000 as farm income, however I did take a look at her deductions. She deducted from her farm income $4,708.65, which I deemed to be a personal expense; she deducted $843.86; she deducted $2,483.79; she deducted $602.24; she also deducted $7,430.80. So I would impute her income outside of the employment income and Employment Insurance to be $30,000.
[36] The motion judge provided no explanation for her finding that the Wife “had a farm income in excess of $12,000” in 2010. With respect, this was an error. This amount is not reflected in the Wife’s 2010 income tax return, which discloses gross farm income of $4,169.32. Further, no explanation for the source of this figure was provided to this court. I appreciate that the motion judge indicated that she “did not use that $12,000 as farm income”. Nonetheless, her finding reflects an erroneous interpretation of the Wife’s 2010 income tax return.
[37] The flaws in the motion judge’s interpretation of the Wife’s 2010 income tax return do not end there. The motion judge indicated that she considered the Wife’s claimed deductions in taxation year 2010 and listed several deductions that, in her view, constituted personal, rather than business expenses.
[38] While it is not entirely clear from her reasons, it appears that the motion judge added the total value of these deductions, in the aggregate sum of $16,069.34, to the Wife’s employment income and employment insurance ($18,755.37) and rounded the resulting figure to impute aggregate annual income to the Wife for 2010 in the amount of $30,000. In other words, she imputed $11,244.63 in business income to the Wife, although her reported gross business income was only $4,169.32. That the motion judge proceeded in this fashion is confirmed by her comments, at p. 27 of her reasons:
So that the litigants understand, I took the Income Tax Returns, I put in whatever income was reflected, I looked at the expenses, and identified what I perceived to be personal expenses, including any depreciation costs, which were paper deductions, and added them to income. If I did not understand wholly whether it was a personal or not personal expense, I did not include it as a personal expense.
[39] The difficulty with this approach, among others, is that it produced an adjusted, imputed income for the Wife from her horse boarding and farm businesses that greatly exceeded her gross reported income from these sources.
[40] Moreover, the motion judge stated that she imputed $30,000 of income to the Wife “outside of [her] employment income and Employment Insurance” (emphasis added). This suggests that the $30,000 imputed income was in addition to the Wife’s employment income and employment insurance for the year 2010.
[41] With respect, this makes no sense. The total value of the deductions identified by the motion judge as personal expenses was $16,069.34, not $30,000. The Wife’s 2010 income tax return does not reflect $30,000 in income “outside of [her] employment income and Employment Insurance”.
[42] The motion judge further found that the Wife had deducted $7,430.80 from her farm income in 2010 on account of personal expenses. This, too, was an error. The Wife’s 2010 income tax return reveals that this sum was not claimed as a deduction at all. Rather, it was treated as a personal benefit to be offset against the Wife’s business losses, thereby reducing the Wife’s claimed losses from her horse boarding and farm operations by the same amount ($7,430.80). In other words, it was an amount included, rather than excluded, from taxable income.
[43] Similar errors are also evident in the motion judge’s interpretation of the Wife’s income tax returns for 2011 to 2013. For example, the motion judge held that the Wife had claimed the following personal expenses as deductions against her business income: i) in 2011, the sum of $9,704.86; and ii) in 2012, the sums of $7,902.53 and $5,535.27. The motion judge notionally added these amounts, or at least part of them, to the Wife’s reported income and used the resulting notional annual income figure to impute income to the Wife, in each year, in the sum of $30,000. With respect, in so doing, the motion judge again erred.
[44] A proper reading of the relevant tax returns reveals that the amounts in question were not deductions on account of personal expenses: i) the $9,704.86 claimed on the Wife’s 2011 return and the $7,902.53 claimed on her 2012 return were deductions for capital cost allowance in respect of the Wife’s horse boarding and farm businesses; and ii) the $5,535.27 cited by the motion judge in respect of the Wife’s 2012 tax return[^1] was not a claimed deduction but, rather, an inclusion in income from the Wife’s businesses, which reduced her reported business losses from $20,354.27 to $14,999.
[45] The motion judge’s reasons with respect to taxation year 2013 give rise to an additional concern. For that year, the motion judge noted that the Wife’s farm income was $5,400 and that “[s]he had deductions from income to reduce that amount. For that reason, I would impute her income at $30,000.”
[46] However, the motion judge provided no explanation of the nature or amount of the deductions from income to which she referred, or of the basis for imputing income to the Wife in the sum of $30,000 for 2013.
[47] Similar errors are also evident in the motion judge’s consideration of Mr. Moore’s income tax returns, in relation to deductions from business income claimed by him in taxation years 2004 to 2013, and in the motion judge’s resulting calculations of the income to be imputed to him for those years.
[48] The motions judge’s spousal support ruling rested on her imputation of annual incomes to the Wife and Mr. Moore and her core finding that they under-declared their annual incomes – at least for spousal support purposes – by claiming personal expenses as deductions from their business income. The motion judge’s errors in interpreting the couple’s income tax returns, described above, fatally tainted her spousal support analysis. On this ground alone, the motion judge’s spousal support ruling cannot stand.
(2) Hearing Fairness
[49] Apart from the flawed calculations detailed above, the motion judge’s consideration and use of the Wife’s and Mr. Moore’s income tax returns is troubling for a second reason.
[50] The Husband did not specifically request the motion judge to impute income to either the Wife or Mr. Moore based on adjustments to their reported finances and income, as disclosed in their income tax returns. Nor was any expert evidence called by either party regarding the proper interpretation of their returns. The motion judge’s review of the returns was largely undertaken after the conclusion of argument on the motion, while her decision was under reserve. Consequently, her interpretation of the returns and the nature of the specific deductions claimed and incomes reported was first disclosed to the parties in her reasons.
[51] The parties, therefore, had no meaningful opportunity to address the motion judge’s concerns regarding the returns, especially her views about the nature and import of the claimed deductions, or to call evidence or make submissions on the proper interpretation of the returns in light of those concerns. As a result, in my view, hearing fairness was thereby compromised.
(3) Husband’s Imputed Income
[52] I consider it appropriate to comment on two additional aspects of the motion judge’s spousal support analysis. First, the record indicates that the Husband’s total annual income in the years 2010 to 2013 was as follows: 2010 - $103,692; 2011 – $102,864; 2012 – $104,441; and 2013 – $104,633. The husband did not contest these figures at the appeal hearing.
[53] As I have said, the motion judge imputed $80,000 annual income to the Husband as of the date of separation, a figure challenged by the Wife. That challenge aside, it is clear that the Husband’s income increased in the years following separation (2004: total gross income of $82,148; 2013: total gross income of $104,633).
[54] Yet, the motion judge held, at pp. 25-26 and 33, that the Husband’s annual pension income after separation did not increase significantly – apart from one year – except for annual indexing of his pension entitlement. She further held that any increases in his pension income should not be used under the federal Spousal Support Advisory Guidelines (the “SSAGs”) to calculate an appropriate amount of spousal support.
[55] The basis for these holdings is far from clear. The fact is that, by 2013, the Husband’s annual income had increased by about 27 percent since the date of separation. Even assuming that $30,000 annual income should be imputed to the Wife for spousal support purposes, given that this was a lengthy, traditional marriage, the differential in the Wife’s and the Husband’s post-separation incomes, based on increases in the Husband’s income, should not be disregarded entirely.
[56] Second, and relatedly, it is noteworthy that nowhere in her reasons does the motion judge address whether the Wife is entitled to compensatory support in accordance with the principles set out in Moge v. Moge, 1992 25 (SCC), [1992] 3 S.C.R. 813 and related cases, in addition or in the alternative to non-compensatory support. Based on the length of the marriage and the evidence of the roles assumed by the parties during marriage, this, too, was a relevant and proper consideration. It was not taken into account here.
(4) Conclusion on Motion Judge’s Spousal Support Ruling
[57] In all these circumstances, the motion judge’s spousal support ruling is unsustainable. It is therefore open to this court to evaluate afresh the Husband’s request for a change in his spousal support obligation. Since that evaluation turns in part on the determination of the issues raised by the Husband on his cross-appeal, I will next consider those issues.
B. Cross-appeal
[58] At the conclusion of oral argument, this court dismissed the cross-appeal, with reasons to follow. These are those reasons.
(1) Consent Order
[59] The motion judge considered her authority to set aside a consent order and addressed the grounds advanced by the Husband in support of his contention that the Consent Order should be set aside or rescinded. She provided clear and cogent reasons for her refusal to do so. I agree with her decision on this issue and her reasoning. In particular, the following considerations overwhelmingly support the motion judge’s dismissal of the Husband’s request to rescind or set aside the Consent Order.
[60] First, the record does not support the Husband’s contention that he did not consent to the settlement or that he did not intend to implement it. The impugned court order was made on consent pursuant to a written settlement reached by the parties on October 14, 2005. The Husband did not seek to appeal the Consent Order, which would have required leave of the court: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 133. Instead, years after the date of the Consent Order, he sought to have it set aside or rescinded on the basis that he did not sign the Minutes of Settlement and that his signature on the Minutes was forged or otherwise fraudulently affixed without his consent or knowledge.
[61] However, the Husband advanced the same claim to anchor his actions against his former solicitor. Those actions were dismissed, as were his appeals therefrom, without any finding of fraud, forgery, breach of fiduciary duty or negligence against his solicitor in relation to the Minutes of Settlement and any of the other settlement documents.
[62] Further, and in any event, the Husband admits that he signed his October 14, 2005 offer to settle, which the Wife accepted. Both the Minutes of Settlement and the Consent Order contain identical terms relating to spousal support as those detailed in the offer to settle. Although the Husband argues that he instructed his solicitor to hold the offer in abeyance, the record indicates that those instructions were communicated after the date of the Consent Order.
[63] The record also includes a document entitled “Acknowledgement”, dated October 14, 2005, which bears the Husband’s signature. In that document, the Husband stated:
I fully understand that by signing the Offer to Settle and following Minutes of Settlement that this matter will be finalized and there is no recourse for me to undo the Minutes of Settlement.
I am advising this Honourable Court that I am signing the Offer to Settle fully understanding its contents, and I have signed the Offer to Settle of my own free will without threat or promise.
[64] The latter statement provides information directly to the court. It therefore appears that a copy of the Acknowledgement may have been filed with the Superior Court in support of the Consent Order. Regardless, apart from the Husband’s bald assertions, there was no evidence before the motion judge, and there is none before this court, that the Husband did not sign the Acknowledgement or that it was the product of fraud or forgery.
[65] The Husband’s execution of the offer to settle and the Acknowledgement is wholly inconsistent with any assertion that he did not consent to or understand the import and legal consequences of his offer to settle and the settlement that followed. The Minutes of Settlement and the Consent Order simply reflect the terms of the Husband’s offer to settle, as confirmed in the Acknowledgement. And, I again emphasize, the Husband’s negligence actions against his former solicitor were dismissed without any finding of impropriety against the solicitor in relation to the settlement. Nor has there been any judicial finding of any impropriety by the Wife concerning the settlement.
[66] Second, the Husband’s unsuccessful negligence suits against his former solicitor were premised on the validity and enforceability of the offer to settle and the Minutes of Settlement, as approved by the court in the Consent Order. The motion judge put it this way, at p. 12 of her reasons:
Given the [Husband’s] choice of action to pursue the negligence against the [Husband’s] counsel, the [Husband] implicitly acknowledged the validity of the [settlement] agreement which was the basis of the [Consent Order]. The sine qua non of the negligence action was the valid existence of the agreement and order.
[67] Similarly, the Husband’s actions in paying the equalization payment and the monthly spousal support payments contemplated under the offer to settle, the Minutes of Settlement and the Consent Order undercut his challenge to the validity of the settlement, including the Consent Order.
[68] In light of these considerations, it is my view that the motion judge was fully justified in refusing to set aside or rescind the Consent Order. There was simply no established basis upon which to do so. That said, the Husband remained free to attempt to change the spousal support arrangements effected by the Consent Order. Indeed, that is part of what he hoped to achieve, and did achieve, on the motion before the motion judge.
[69] Finally, I note, as observed by the motion judge, that the Husband delayed at least four years (and, arguably, nine years) from the date of the Consent Order before actively pursuing steps to set it aside. His delay in seeking to do so strongly militated against granting the relief he belatedly sought before the motion judge regarding the Consent Order.
(2) Marriage Contract
[70] I reach the same conclusion concerning the motion judge’s ruling about the enforceability of the Marriage Contract. Here, too, in my view, there was ample justification for denying the relief sought by the Husband.
[71] The Husband’s October 14, 2005 settlement offer, by which he offered to pay monthly support to the Wife in the sum of $2,200, was inconsistent with the terms of the Marriage Contract regarding spousal support. The Husband’s offer, once accepted, overtook any prior inconsistent agreement between the parties concerning spousal support. On this basis alone, this ground of appeal fails.
[72] But there is more. Having considered the terms of the Marriage Contract and the parties’ positions and circumstances at the time of its execution, the motion judge held that it was “highly unlikely” that the Marriage Contract would have governed the parties as of the date of their separation because it would have been set aside under the provisions of the Family Law Act, R.S.O. 1990, c. F.3 and the common law. I agree.
[73] Several factors compel this conclusion. On the motion judge’s uncontested findings, at pp. 13-15 of her reasons:
no financial disclosure by the Husband appears to have taken place prior to formation of the Marriage Contract;
there is no evidence that the Wife received independent legal advice regarding the Marriage Contract; indeed, there was evidence to the contrary before the motion judge;
no financial statements or certificates of independent legal advice are referenced in or attached to the Marriage Contract;
at the time of execution of the Marriage Contract, an imbalance of power existed between the parties, to the detriment of the Wife, “created by the pending marriage and the lack of appreciation of the legal implications of the domestic contract”;
the Wife did not have an extensive opportunity to review the contents of the Marriage Contract or to fully understand its terms and implications prior to its execution;
the Wife had no input into the drafting of the Marriage Contract, which was prepared by the Husband’s Ontario solicitor solely on the Husband’s instructions; and
the Wife’s facility in English in 1985 and the extent of her formal education (grade 10) were both limited.
[74] These key findings, which are not attacked by the Husband before this court, were open to the motion judge on the evidentiary record before her. In light of them, I see no error in the motion judge’s holding that the Marriage Contract does not govern the parties’ post-separation rights and obligations. In light of the factors set out above, I think it is inconceivable that this Marriage Contract, aptly described by the motion judge at p. 15 of her reasons as a “kitchen table” agreement, would survive scrutiny under the Family Law Act.
C. Remedy
[75] The errors in the motion judge’s spousal support analysis, described above, constitute errors in principle and reflect a significant misapprehension of some of the key evidence. Accordingly, they displace the usual deference to be accorded by a reviewing court to a motion judge’s discretionary spousal support ruling: Hickey v. Hickey, 1999 691 (SCC), [1999] 2 S.C.R. 518, at para. 11. The issues, therefore, are what spousal support should be paid by the Husband to the Wife, if any, and for how long. In my view, the record before this court is sufficient to permit a determination of these issues, without the need to order a new trial with attendant delay and additional costs. I did not understand the parties to suggest otherwise.
[76] I have already concluded that the motion judge was correct to hold that, on the evidence, a material change in circumstances occurred in this case after the date of the Consent Order. That change in circumstances, in my view, warrants a variation in the Husband’s spousal support obligation on a retroactive and prospective basis. However, I am not persuaded that this is a proper case for termination of spousal support.
[77] The Wife’s income from employment is modest. She has worked at Tim Hortons since late 2007, at minimum wage and without benefits. She has limited education and marketable skills and, on the state of the evidentiary record, no reasonable prospects for securing higher paying employment. To the contrary, the evidence indicates that she continues to experience medical difficulties following surgery on her wrist, which has confined her to “light duties” at her place of employment. Her ability to work indefinitely, even at minimum wage, is therefore uncertain and her health appears somewhat precarious.
[78] Mr. Moore’s annual income is also modest. He is a beef farmer who drives a school bus part-time to supplement his income. This employment yields approximately $8-10,000 gross income per year. His income tax returns for 2004 to 2013 reveal gross annual incomes ranging from $16,820 (2004) to $2,242 (2013).
[79] Even assuming that some of the deductions claimed by the Wife and Mr. Moore on their income tax returns could properly be characterized as relating to personal expenses for spousal support purposes, the couple’s annual combined income remains modest.
[80] In contrast, based on his reported 2013 annual income, the Husband’s current retirement pension income approximates at least $105,000 per year. This level of income, which is considerably higher than that of the Wife, is sufficient to afford a comfortable, but certainly not a lavish, lifestyle. It establishes the Husband’s ability to pay ongoing spousal support.
[81] The record reveals the following approximate incomes for the parties and Mr. Moore in the years 2008 to 2013:
Wife’s employment-related Income
Wife’s Net Income* after Farm Profit/Loss
Husband’s Net Income
Mr. Moore’s Net Income
2008
$22,611
$101,667
$203
2009
18,330
103,922
401
2010
18,755
16,902
103,692
3,897
2011
20,477
11,752
102,864
13,003
2012
19,082
10,333
104,441
18,491
2013
22,751
13,928
104,633
2,062
*Excluding spousal support payments
[82] Given the differential between the Husband’s net income in 2013 ($104,633) and the Wife’s net income for the same year ($13,928), it is clear that some spousal support is required. A comparison of the Wife’s net income from all sources in 2013, together with that of Mr. Moore, with the Husband’s net income for the same year yields the same conclusion.
[83] The SSAGs provide useful guidance in this regard. Based on the incomes set out above (without any deduction on account of the Wife’s business losses), the SSAGs suggest the following range for monthly spousal support in the years after the Wife commenced employment at Tim Hortons:
Low End
Mid-Range
High End
2008
$1,976
$2,036
$2,635
2009
2,140
2,496
2,853
2010
2,123
2,477
2,831
2011
2,060
2,403
2,746
2012
2,134
2,490
2,845
2013
2,047
2,388
2,729
[84] The Wife acknowledges that some variation in the Husband’s spousal support payments is warranted in all the circumstances, on both a partially retroactive and prospective basis. She proposes the following changes:
(1) October 2005 to October 1, 2010: $2,200 per month, as paid by the Husband
(2) November 1, 2010 to October 1, 2012: 1,900 per month
(3) November 1, 2012 to October 1, 2014: $1,750 per month
(4) November 1, 2014 for an indefinite period: $1,600 per month
[85] The Husband does not specifically attack this proposal, nor has he put forward an alternative proposal, should the appeal otherwise be allowed.
[86] I regard the Wife’s variation proposal as both reasonable and appropriate. First, with the exception of the proposed monthly support amount for the period October 2005 to October 2010, the amounts proposed by her are well below the low end of monthly support payments set out in the SSAGs for the relevant years, based on the continuing differential between the Wife’s and the Husband’s annual incomes. These lower support amounts reflect a partial sharing of the Husband’s post-separation income increases and are appropriate given the Wife’s re-partnering. Second, the Wife’s proposal contemplates spousal support on both a compensatory and non-compensatory basis. This is also appropriate on the facts of this case. Third, at the appeal hearing, neither party suggested any change to the quantum of the pre-October 2010 monthly spousal support. Instead, they supported the motion judge’s ruling that spousal support should continue at the $2,200 per month level until October 2010.
[87] In all these circumstances, I would fix the Husband’s spousal support obligation as follows:
(1) October 2005 to October 1, 2010: $2,200 per month
(2) November 1, 2010 to October 1, 2012: $1,900 per month
(3) November 1, 2012 to October 1, 2014: $1,750 per month
(4) November 1, 2014 for an indefinite period: $1,600 per month
[88] I would also direct that the variation in spousal support from November 1, 2014 onwards is subject to review in the future as a result of any further material change or changes in the parties’ circumstances.
Disposition
[89] For the reasons given, I would allow the appeal, set aside paragraph four of the judgment below and substitute in its stead spousal support terms in accordance with paragraphs 87 and 88 of these reasons. I would leave it to the parties to recalculate the state of accounts between them, based on the adjusted spousal support terms set out in these reasons. I would also dismiss the cross-appeal.
[90] On my proposed disposition of the appeal and cross-appeal, the Wife has been wholly successful. She is therefore entitled to her costs of the appeal and cross-appeal, as well as those of the motion before the motion judge. I would fix the costs of all three proceedings in the total amount of $32,500, inclusive of disbursements and all applicable taxes.
Released:
“PR” “E.A. Cronk J.A.”
“NOV 14 2016” “I agree Paul Rouleau J.A.”
“I agree Grant Huscroft J.A.”
[^1]: The amount cited by the motion judge appears to be a typographical error. The actual amount stipulated in the Wife’s 2012 tax return is $5,355.27.