Haworth v. Haworth
Ontario Reports Court of Appeal for Ontario Doherty, D.M. Miller and Fairburn JJ.A. December 20, 2018
145 O.R. (3d) 74 | 2018 ONCA 1055
Case Summary
Family law — Support — Spousal support — Variation
Minutes of settlement and 1991 divorce judgment providing for payment of spousal support to appellant in amount of $4,000 per month for life. Respondent moving in 2017 to eliminate spousal support. Motion judge reducing spousal support to $1 per month. Appellant's appeal allowed. Motion judge erring in finding that applicant's failure to seek employment was material change in circumstance. Motion judge not erring in finding that substantial reduction in respondent's income after his retirement at age 72 was material change. Motion judge failing to vary original support order only to extent required by that change in circumstances. Spousal support varied to $850 per month for life.
Facts
In 1991, the parties entered into minutes of settlement, reflected in a divorce judgment, that required the respondent to pay the appellant spousal support of $4,000 per month for the rest of the appellant's life. At that time, the respondent was earning between $250,000 and $300,000 per year. The respondent retired at the age of 72, and his base income was reduced to $65,000. In 2017, he brought a motion to vary the divorce judgment to eliminate spousal support. The motion judge found that there were two material changes in circumstances: the appellant's decision not to seek employment since the separation, and the respondent's retirement and the corresponding decrease in his income. The motion judge reduced spousal support to $1 per month. The appellant appealed that order. She also appealed a 2015 order varying provisions in the divorce judgment relating to insurance and security for payment of spousal support.
Decision
Held: The appeal should be allowed in part.
Cases Referred To
- Miglin v. Miglin, [2003] 1 S.C.R. 303, 2003 SCC 24
- P. (L.M.) v. S. (L.), [2011] 3 S.C.R. 775, 2011 SCC 64
- Pustai v. Pustai, [2014] O.J. No. 3624, 2014 ONCA 422
- Schulstad v. Schulstad, [2017] O.J. No. 513, 2017 ONCA 95
Statutes Referred To
Appeal
APPEAL from the orders of Minnema J., [2018] O.J. No. 85, 2018 ONSC 159 (S.C.J.).
Brenda Haworth, in person.
Mark A.B Frederick, for respondent.
BY THE COURT:
I. Overview
[1] The parties separated in 1985 after a 17-year marriage. They agreed on minutes of settlement in 1991. Their agreement is reflected in a divorce judgment from that same year.
[2] The respondent brought a motion to vary the divorce judgment, but the appellant did not appear. The respondent asked for changes to various provisions, including clauses relating to insurance and security for payment of spousal support. The motion was granted and the divorce judgment varied accordingly on October 5, 2015 (the "2015 order").
[3] In the fall of 2017, the respondent brought a further motion to change the 1991 divorce judgment. This time he asked to be relieved of his spousal support obligations. The appellant opposed that motion and, at the same time, sought to have the 2015 order varying the divorce judgment set aside. This is an appeal from the order (1) dismissing the appellant's motion to have the 2015 order set aside; and (2) granting the respondent's motion, decreasing the spousal support from $4,000 to $1 per month.
II. The Motion to Set Aside the 2015 Order
[4] The appellant claims that the motion judge erred in dismissing her request to have the 2015 order set aside. She advances the same argument in this court that she did before the motion judge. She says that she did not receive procedural fairness given that she had no notice of the original motion to change.
[5] The motion judge gave numerous reasons for refusing to set aside the 2015 order. He was satisfied that the appellant knew about the hearing long before it occurred and was properly served with all motion materials. Moreover, the motion judge found that the appellant did not have an arguable defence on the merits. Nor did she move promptly to have the judgment set aside.
[6] In our view, the motion judge considered all relevant criteria and provided convincing reasons for why the 2015 order should not be set aside. We see no error in his approach.
III. The Motion to Decrease Spousal Support
(a) Threshold of Material Change in Circumstances
[7] The appellant also appeals from the motion judge's decision to vary the respondent's support obligation. The divorce judgment arose from minutes of settlement that had been reached by the parties. They had agreed upon the respondent's support obligations to the appellant. That agreement had been endorsed by the court in the 1991 divorce judgment, requiring the respondent to pay spousal support in the amount of $4,000 per month "until the [appellant] dies".
[8] The appellant argues that there is no basis upon which this agreement, distilled into a court order, can be changed and, therefore, the motion judge erred in varying the support from $4,000 to $1 per month. The appellant contends that, even in the face of a material change in circumstances, an agreement is an agreement and the support obligation cannot be altered.
[9] Although we disagree that the support obligation in this case was not susceptible to change, we find that the motion judge erred in two ways in arriving at the change from $4,000 to $1 per month: (a) in considering what constitutes a material change in circumstances; and (b) in failing to give any deference to the original order of support.
[10] The respondent had a successful 49-year dentistry practice. When the parties entered into their minutes of settlement and the divorce judgment issued in 1991, the respondent was earning between $250,000 and $300,000 per year. As retirement approached, the respondent put the appellant on notice that he would eventually seek to have the spousal support terminated. Once he was retired, and the respondent's income had dropped to $65,000 per year (not including interest and investment income), the respondent brought the motion. That motion was ultimately decided when the parties were 73 years of age.
[11] In deciding to change the spousal support from $4,000 to $1 per month, the motion judge concluded that there had been two material changes in circumstances. He found that the "most significant material change" was the appellant's decision not to seek employment since the separation. Although the motion judge said that there was no obligation on the appellant to become self-sufficient, there was an "obligation on her as a spousal support recipient to make reasonable efforts to contribute to her own support". She had not done so. Indeed, as pointed out by the motion judge, the appellant admitted in her motion materials that she had stopped working after the birth of their second child and that she was "certain that the settlement would provide enough income for her to structure her post-divorce life as wanted".
[12] The motion judge concluded that the second material change in circumstances arose from the respondent's retirement and the corresponding substantial decrease in his annual income. Given that the respondent was 72 years of age when he retired, this was not a situation where the payor spouse took an early retirement to avoid support obligations. Rather, the respondent retired at a reasonable age and his new $65,000 base income was to be derived from RRIF withdrawals and his CPP and OAS entitlements. Even if one were to add the amount that may be derived from the husband's investments, at an annual rate as high as 5 per cent, his income would not approach his earnings in 1991 dollars.
[13] We disagree that the appellant's failure to seek employment since 1991 constitutes a material change in circumstances. The clear wording of the divorce judgment was that spousal support would continue to death. The appellant was entitled to rely upon that judgment. The respondent waited far too long to raise the appellant's decision not to seek gainful employment until an age when she was effectively precluded from correcting the situation.
[14] We would, however, agree with the motion judge that the respondent's substantial decrease in annual income does meet the threshold for variation: while the agreement specified support for life for the appellant, it also expressly contemplated a salary level far exceeding what the respondent will receive in retirement. As in Schulstad v. Schulstad, [2017] O.J. No. 513, 2017 ONCA 95, while retirement may have been within the parties' contemplation at the time, the effect of that retirement was not considered in fixing the amount of support. Again, as in Schulstad, it would not have been possible for the parties, or the judge making the original order, to know what the respondent's financial circumstances would be at retirement some 25 years later.
(b) Deference to the Original Support Order
[15] Having found material changes in circumstances, the motion judge went on to consider the four objectives that apply to a variation of spousal support under s. 17(7) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.). He concluded as follows:
(a) Any economic disadvantages to the appellant arising from the marriage breakdown had long passed. Indeed, the motion judge concluded that the wife had structured her post-divorce life in a way that allowed her to "live life to the fullest and not work".
(b) The appellant had suffered no adverse financial consequences as a result of the children's care.
(c) To the extent that the appellant was experiencing any financial hardship, it did not arise from the marriage but "from her own decision not to work".
(d) Although the motion judge acknowledged that there was no expectation that the wife would obtain employment now that she is in her 70s, he concluded that she could rearrange or manage her assets, including residences in France and Panama, to "secure an increased income stream if desired".
[16] Having regard to those factors, the motion judge reduced the spousal support from $4,000 to $1 per month. This effectively amounted to a rescission of the support order.
[17] In our view, the motion judge erred in that approach to the variation.
[18] Conspicuously absent from his reasons is an acknowledgment that the original support order -- assumed to itself be in compliance with the Divorce Act objectives -- expressly provided for spousal support for life: "each and every month thereafter until the [appellant] dies".
[19] As Bastarache and Arbour JJ. said in Miglin v. Miglin, [2003] 1 S.C.R. 303, 2003 SCC 24, at para. 62: "judges making variation orders under s. 17 limit themselves to making the appropriate variation, but do not weigh all the factors to make a fresh order unrelated to the existing one, unless the circumstances require the rescission, rather than a mere variation of the order". (See, also, P. (L.M.) v. S. (L.), [2011] 3 S.C.R. 775, 2011 SCC 64, at para. 47.) The fact is that the spousal support order reflected what had been agreed upon by the parties and that order was only one component of a larger agreement.
[20] When the minutes of settlement, as endorsed by the divorce judgment, are read contextually, the parties' agreement on support for life makes more sense. Using the original support order as the starting point, it is apparent that the ongoing support amount of $4,000 per month was not just for compensatory support. Indeed, another provision in the order set out $40,000 expressly for "compensatory support". This suggests that the monthly support provision contemplated at least some non-compensatory entitlement.
[21] The variation to spousal support had to be considered against the backdrop of the original order which was arrived upon in the context of a broader agreement. This was not a case that required a rescission of the original support order. Instead, the motion judge should have used the original support order and varied it only to the extent required by the change: Pustai v. Pustai, [2014] O.J. No. 3624, 2014 ONCA 422, at para. 26. The respondent's decreased income, combined with the motion judge's finding that the appellant does not face economic hardship, were relevant considerations in determining the extent of the variation.
[22] Accordingly, we would reduce the previously ordered spousal support in proportion with the respondent's decreased income. Although the Spousal Support Advisory Guidelines ("SSAGs") became available long after the time of the parties' agreement, they still provide some insight into the level of agreed upon support back then. Applying the SSAGs to the parties' respective incomes helps put the original support order in context. Taking into account the 17-year marriage, the parties' ages, an earned income of $275,000 per year for the respondent at the time (to use the mid-point of his salary range) and attributing no income to the appellant, yields roughly $6,000-8,000 per month for the appellant for approximately 8.5-17 years.
[23] Looked at in this way, the original order was for a low amount of support, i.e., only $4,000, but for a potentially much longer period of time, i.e., the appellant's lifetime. Now that the respondent's income has decreased to the equivalent of an earned income of $65,000 plus a return on his investment estimated at $27,000 per year (3 per cent on one half of his jointly owned "open investments" of $1.8 million), and the appellant's income has increased to $32,000 per year, the amount of support should be varied accordingly. Given that the original support constituted approximately two thirds of the low end of the SSAGs, we would continue with that same formula, but based upon current income. Having regard to the parties' current income, today the low end of the SSAGs would be $1,275. Two-thirds of that amount is $850 per month for life.
IV. Conclusion
[24] We would set aside the order reducing the spousal support to $1 and make a new order reducing the spousal support from $4,000 per month to $850 per month for life.
[25] Given the appellant's mixed success on appeal, we would vary the trial judge's costs order, requiring that the appellant pay the respondent $8,000 (instead of $26,000) in costs. In light of the mixed success on appeal, no costs will be ordered.
Appeal allowed in part.
End of Document