Edward Graca v. Dale Alexandra Graca, 2012 ONSC 3934

ONTARIO SUPERIOR COURT OF JUSTICE – FAMILY LAW

Court File No.: FS-11-17725
Date: 20120704

BETWEEN:

EDWARD GRACA Applicant
– and –
DALE ALEXANDRA GRACA Respondent

Avra Rosen, Counsel for the Applicant
Anthony V.R. Martin, Counsel for the Respondent

HEARD: JUNE 14, 2012

ENDORSEMENT: GREER J. :

1The Applicant, Edward Graca, moves for an Order terminating his spousal support obligation payable to the Respondent, Dale Alexandra Graca, effective January 1, 2012, or in the alternative, reducing the support to $100 per month effective January 1, 2012, with credit to him for all the payments made to her since January 1, 2012.

2In addition the Applicant (“former Husband”) asks for an Order terminating his obligation to maintain life insurance to secure the support obligation payable to the Respondent (“former Wife”).

3The parties were married on June 25, 1977, separated on March 27, 1998 and were divorced on May 30, 2002. Theirs was a long-term 21 year traditional marriage. On March 22, 2002, the parties signed Minutes of Settlement. There are 2 children of the parties’ marriage, now both adults.

4In the parties’ Final Minutes of Settlement (“the Minutes”), all issues between them were settled. Under the Minutes, the former Husband paid child support and spousal support to the Wife. Para. 9(c)(i) states that the former Husband’s income for the year 2000 was $66,354. Para. 10(a) orders the former Husband to pay spousal support of $700 per month until the earliest of:

(i) March 30, 2003, when the amount of support was to be reviewed by either party, “without the necessity of any material change in circumstances”.

(ii) The applicant dies or the Respondent dies under para. 10(b) the spousal support “shall continue until a Court Order or a written Argument is entered into to vary the Court Order or domestic contract”.

This paragraph also contemplates that even if the former Husband predeceases the former spouse, his spousal support is to continue, protected by the life insurance policy(s) covering his life.

5At the time the Minutes were entered into, the former Husband was a high school teacher covered under the teachers’ group policy. He also had a State Farm policy at that date.

6Para. 11 of the Minutes covers the issue of a material change in circumstances relating to inter alia, spousal support. Notice is to be given to the spouse and if no agreement is reached within 30 days, the former Husband may move by way of an Application. He did so on November 28, 2011 after proper notice.

7At the time of separation, the former Husband’s Teachers’ Pension was valued at $130,441 and its value formed part of the Husband’s Net Family Property.

8The former Husband says he was obliged to retire from the School Board in June 2010 for medical reasons. He was then 58.3 years of age. The former Husband’s psychiatrist, Dr. Ahmed, in his letter of June 22, 2010, sets out the reasons. He is being treated for “panic attacks” and unable to continue teaching. He takes 2 anti-depressants daily.

9The former Husband receives $58,564.04 from his teaching pension. He had an actuary calculate the amount of income not equalized back in 2002 when the parties entered into the Minutes. It is $26,461.

10The former Wife received the parties’ matrimonial home when they separated and she still owns it. In 2000, the former Husband’s income was $68,354 and the former Wife’s was $24,292.

11After the parties divorced, the former Husband remarried. His second wife died and he receives $11,000 per year from her pension. His income in 2011 is $69,385.36 and the former Wife, who works part-time as a waitress at Queen’s Landing, has an income of $35,051 with spousal support of $8,400 included in that. Her Financial Statement sworn June 7, 2012, shows her expenses at $39,735.24 that year and she is carrying debts of $25,247.47.

12The former Husband says his 2010 reported income is $99,649.49 but says it includes $32,103 of pension income, which was previously equalized by him under the Minutes. He owns a home in Toronto, on Lawrence Avenue West, bought with his second Wife for $445,000 in 2004. His Financial Statement sworn November 25, 2011 shows his income of $61,189.20 but it does not state whether his pension income includes the extra pension income he receives from his late Wife’s estate or pension. Secondly, he shows only a ½ interest in the house at $265,000 so full value would be $536,000 or so, if it passed by right of survivorship to him. No explanation of this was given. He continues to own a condo in St. Catharines which was part of the settlement with the former Wife. The value of his assets, with ½ interest in the Toronto home is $534,806, with debts of $182,666.99.

13Under Para. 17, of the Minutes, the details respecting the former Husband’s pension are set out. Subparagraph 17(g)(a) states that if the former Husband retires “prior to the age of 60 and the pension is valued at greater than $130,441 (age 60 value) he shall pay to the former Wife one-half the difference in value plus accrued interest from September 30, 2001 calculated at 6% per annum. Subparagraph 17(g)(b) says if he retires prior to age 60, not voluntarily, but as a result of “sickness or disability” and is forced to access his retirement pension still to his disability, he shall not be obligated to pay to the former Wife, the support as contemplated in clause 17(g)(a).

The former Husband’s position

14The former Husband says he was “forced” to retire due to sickness and disability. He says he simply was unable to come to Court until he did bring on his Application. He says to keep paying the former Wife any spousal support would be “double-dipping” for her. He says he should not have to pay her any further support. He also points to the rental income the former Wife receives from a boarder in her home, which she mainly writes off against expenses of operating the home. Even though CRA accepts this deduction, the former Husband wants income to be attributed to her, which he says is a “tax fiction” by her.

The former Wife’s position

15The former Wife says there has been no material change in circumstances to allow the former Husband to cease paying spousal support. The former Wife says she supported her former Husband when he returned to school to get a Master’s Degree. She says the former Husband also gets rental income from the condo he owns, which he mortgaged for $70,000 to put into the new Toronto home after he remarried. He now writes off that expense and takes CCA on the condo to reduce his rental income to zero. She points to the fact that since the former Husband no longer pays child support, he is in a better position now than he was.

16The former Wife says that Para. 10 clearly says death is the cut-off point for him to pay her to receive spousal support. She says there is nothing making that paragraph subject to paragraph 11 respecting a material change or subject to paragraph 17 respecting the former Husband’s pension.

17The former Wife says there is no evidence that the Board of Education says that the former Husband is disabled or retired due to illness. He may have been able to retire, at any event, then.

18The former Wife also says her 2010 income includes some RRSP redemption she had to make in order to meet expenses. She points to the fact that the former Husband’s second Wife earned $90,000 a year before she died, while the Wife continued to work part-time at minimum wage, as she is on the verge of turning 60. She says when the sons left home and she no longer received child support, she had to rent out a room in the home, and annuitize a LIRA she had, which now produces $300 per month.

Analysis

19The former Husband’s Application is dismissed for the reasons which follow. The former Husband has in no way been financially disadvantaged by his retirement. To the contrary, he has more assets now than he did at separation. He has not provided the Court with a copy of his 2011 Income Tax Return, but a comparison of the two parties’ incomes from 2002 to 2011, show there has been no disadvantage to him continuing to pay. The former Husband has not provided copies of his Returns or Notices of Assessment, so the income figures set out below are in the main, based on his T4 slips:

Former Husband  Former Wife

2002
$70,024.00

2002
Unknown

2003
$75,606.03

2003
$38,536.00

2004
$75,899.37

2004
$36,076.00

2005
Unknown

2005
$28,483.00

2006
$84,256.56

2006
$37,038.00

2007
$86,379.60

2007
$33,120.00

2008
$93,420.00

2008
$39,400.00

2009
$113,808.00

2009
$36,170.00

2010
$99,647.00

2010
$44,618.00 (including a transfer of $11,000 from a mutual fund to RRSP)

2011
$69,354.00

2011
$35,056.00

20Even if one accepts that the former Husband had to retire for reasons of “illness and disability” or as stated by his psychiatrist, his teacher’s pension alone at that date was 3 times the former Wife’s income. His RRSP’s of $110,000 will also produce more income for him in the future. He can also sell the condo and re-invest the net proceeds if necessary.

21The insurance policy was put in place to specifically take over the spousal support in the event of the former Husband’s death, to ensure that spousal support continued for her, given the long-term marriage and the former Wife’s inability to earn much over the $36,000 range including spousal support.

22The former Husband has provided no proof that he retired at anything less than a full pension for his years of service. There is nothing from the Board setting out the number of years he taught and whether his $58,000 plus teacher’s pension would be worth more if he was still working until age 60.

23The former Husband did not follow the terms of the Minutes and in October 2002, he unilaterally replaced the State Farm policy with a Transamerica one. There may have been a cash surrender value when the policy was changed but there is no statement to show that this was not so.

24It is clear from the financial evidence that the former Wife would be left in a position of considerable financial hardship if she no longer received spousal support. She has never had an opportunity to earn enough to save for her future retirement, despite the fact that when she is 65 she will receive OAS and some small amount of CPP.

25It is for these reasons that the former Husband must continue to maintain insurance coverage with the former Wife as beneficiary. The parties, however, are free to take alternative estate planning measures in writing to give the former Wife protection of her spousal support entitlement, in the event the former Husband predeceases her.

26Under the Divorce Act, S.17(4.1), the Court must be satisfied 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, if the former Husband is to succeed on his Application.

27The Minutes do not mention that retirement is a change in circumstances in Para. 10(a). In Para. 17(f), the former Husband says he cannot retire at age 57, “given his total financial situation” “but will retire no earlier than age 60”. There is a reasonable inference that the Husband could retire at 57 on a full pension, which he did receive at age 58.3 years. By then, his financial position had immeasurably improved, no longer having to pay child support and having the benefit of his second Wife’s income and later an inheritance and/or pension benefit from her estate.

28The former Wife’s health is not as it was when she entered into the Minutes. She says she has osteoarthritis in her left shoulder and right knee, suffers from tendinitis in her left shoulder, and can no longer lift the large trays required of her as a waitress. She also suffers from Graves disease.

29The Supreme Court of Canada in Willick v. Willick, [1994] S.C.J. at para. 21 set out the definition of material change in circumstances that other courts have followed, being a change such that, if know at the time, would likely have resulted in different terms.

30In Boston v. Boston, 2001 SCC 43, 2001 CarswellOnt. 2432 (S.C.C.), looked at how the Court should, when practicable, avoid double recovery. The former Husband relied on Stephenson v. Stephenson, 2012 CarswellOnt 4090 (Div.Ct.) where a husband’s pension had already been included for spousal support purposes and the Motions Judge included the full pension for spousal support purposes when the husband retired in 2010. The Court said double-dipping should not be allowed.

31In the case at bar, I find there has been no material change in circumstances as the Husband’s financial situation is much improved. The former Wife received no increase in spousal support over the nearly 10 years since the Minutes were signed, despite the former Husband’s substantial increase in income over those years.

32In my view, the case at bar falls within the parameters of Bullock v. Bullock, 2004 16949 (ON SC), [2004] O.J. No. 909 (S.C.J.), where Mr. Justice Corbett states in para. 1 that each case must be looked at on the basis of the unique circumstances of the parties. He found that withdrawal from the workforce at age 62 does not necessarily qualify as a “material change in circumstances”, justifying a variation. He says as a general proposition:

…a payor of spousal support should make his or her retirement plans on the basis that support will continue until the aggregate retirement savings can be expected to keep both spouses at reasonable standards of living. Otherwise, our regime of spousal support will tend to leave payee spouses in positions of financial need, often dire need, at a time in their lives when they cannot take meaningful steps to ameliorate their own condition.

This proposition, in most respects, mirrors the case before me. In each case there was a long-term marriage, adult children and a payor spouse who financially was able to continue support after his voluntary retirement.

33I also adopt the wording in Poulter v. Poulter, 2005 BCCA 227, [2005] B.C.J. No. 895 (C.A.) in para. 18, where the Court found that the husband had the means to pay so there was no material change in circumstance. See also: Riml v. Riml, O.J. No. 610 (S.C.J.) at para. 26, where the Court found that notwithstanding the principle of double recovery, the need of the payee spouse was such that the spousal support should not be varied.

34The Application is therefore dismissed. If the parties cannot agree on Costs, the parties shall submit written submissions to me no longer than 3 pages plus case law, dockets and a Bill of Costs and any Offers to Settle. They shall be sent to me at Osgoode Hall by July 31, 2012, with the Respondent, as the successful party, submitting her Submissions to the Applicant’s counsel by July 20, and the Applicant’s 7 days thereafter, and any Reply 5 days thereafter.

Greer J.