ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 388-2007
DATE: 2012/02/09

BETWEEN:

Micheline Greffe
Applicant (Responding party)

– and –

Gilles Greffe
Respondent (Moving party)

Mr. J. J. Lacombe, for the Applicant
Mr. G. E. Langlois, for the Respondent

HEARD: November 18, 2011

PELLETIER, J.

reasons for judgment on a motion to change an order
and agreement for spousal support

[ 1 ] Since June 2008, the Respondent has been required to pay $2,000 a month in spousal support to the Applicant. The parties were married 25 years. The Respondent was the primary wage earner, and the Applicant fulfilled a largely child caring and homemaking role. The parties separated in 2004 and agreed to the terms of a separation agreement on April 21, 2008, part of which was incorporated into a final order on June 4, 2008 when the divorce was granted.

[ 2 ] The negotiated $2,000 a month spousal support obligation was, by and large, quite favourable to the Respondent considering the income he was generating at the time, in excess of $150,000 a year as a steel mill foreman and municipal counsellor, and notwithstanding the duration of the marriage. The Applicant accepted the certainty and predictability of receiving $2,000 a month for 9 years, that is, until the Respondent reached the age of 60 on August 18, 2017. In so doing, she chose to forego a combined spousal support and child support amount, given that the parties’ youngest child was still financially dependent upon her parents, of over $5,000 a month.

[ 3 ] Indeed, an examination of mid-range spousal support calculations over the past three years given the parties’ respective income tends to show that the Applicant has foregone support in excess of $80,000 over that period of time.

[ 4 ] That said, the Applicant gained as well from the settlement in 2008. Her income tax obligation of $31,462.64 flowing from the spousal support payments she received monthly in the amount of $3,180 in 2005, 2006 and 2007, was paid by the Respondent, who, it must also be noted, received $36,206.52 in income tax refunds when the terms of the 2008 agreement permitted him to re-file for the previous three years.

[ 5 ] Equalization was waived by both parties and property issues were resolved on consent. Both the Applicant and the Respondent were represented by experienced family law practitioners. The settlement also involved the services of a highly qualified mediator.

[ 6 ] In sum, the negotiations and the ultimate agreement, representing benefits and concessions by both parties, resulted in a settlement that provided certainty and predictability without the need for lengthy, costly and stressful court proceedings.

[ 7 ] The separation agreement, remarkably rigid on the issue of the spousal support obligation and its irrevocability, provided as follows at paragraphs 3, 7, 8 and 9.

3. À partir du 1er janvier, 2008, l’intimé versera à la requérante
   une pension alimentaire pour épouse, laquelle est garantie et sans
   possibilité de la modifier, du montant de 2,000.00$ par mois,
   jusqu’à ce que l’intimé atteigne l’âge de 60 ans, soit le 18 août, 2017.
   La pension alimentaire sera un revenu imposable pour la requérante et
   constituera une dépense déductible pour l’intimé pour fin d’impôt.
   La requérante reconnaît que l’intimé a versé une pension
   alimentaire pour conjoint depuis la séparation des parties et
   qu’il n’existe présentement aucun retard quant à ces versements.
   La requérante reconnais que l’intimé a versé une pension alimentaire
   du montant de 3,180.00$ par mois pour les années 2005, 2006 et 2007 .

4. Les parties reconnaissent que les termes de cette entente concernant
   la pension alimentaire sont basés sur le fait que l’intimé et la
   requérante renoncent tous deux à jamais à faire une demande en
   modification concernant les termes de la pension alimentaire étant
   payable en vertu de la présente entente et ce, nonobstant
   n’importe lequel changement important dans les circonstances
   financières de l’une ou de l’autre des parties, et ce, même si, entre autre,
   l’intimé perd son emploi ou si son employeur Ivaco ferme ses portes
   ou si la situation financière de la requérante s’améliore grandement.

5. Les parties s’entendent toutefois qu’avenant le cas où l’intimé,
   avant d’avoir atteint l’âge de 53.74 ans est congédié par son employeur
   Ivaco ou si Ivaco ferme ses portes et que l’intimé n’a pas à ce
   moment des revenus alternatifs équivalent à un salaire annuel
   d’au mois 50,000.00$ et qu’il ne reçoit pas de prime de départ (severance)
   de son employeur, les parties s’entendent qu’uniquement dans ces
   circonstances et seulement pour la période suivant ce congédiement
   ou la fermeture des portes de son employeur jusqu’à ce que l’intimé
   atteigne l’âge de 53.74 ans, que l’intimé ait choisi ou non à ce
   moment de recevoir ses prestations de pension de son employeur,
   la pension alimentaire payable à la requérante en vertu de la présente
   entente sera réduite à 1,000.00$ par mois. Aussitôt que l’intimé aura
   atteint l’âge de 53.74 ans, qu’il reçoive ou non à ce moment ses prestations
   de sa pension au travail, la pension alimentaire sera alors rétablit à
   $2,000 par mois jusqu’à ce que l’intimé atteigne l’âge de 60 ans.

6. Les parties reconnaissent que tous les termes de la présente ont été
   convenus suite à la tenue de médiation et nombreuses discussions entre
   les parties afin de régler cette affaire sans l’assistance des tribunaux et
   que toutes les clauses de la présente entente sont intrinsèquement reliées
   l’une à l’autre et advenant que l’intimé présente une demande afin de faire
   réduire le montant ou la durée de la pension alimentaire prévue dans la
   présente entente, à l’encontre des termes de la présente entente ou qu’il
   ne paye pas pour une raison quelconque la pension alimentaire garantie
   dans cette entente, les parties reconnaissent et s’entendent qu’à ce
   moment, la requérante aura alors de droit de présenter une demande
   d’égalisation des biens familiaux nets des parties et de présenter une
   demande pour une pension alimentaire supérieure à celle prévue dans
   la présente protocole.

[ 8 ] While the spousal support obligation purported to be absolute and invariable, the agreement did provide for a review and a reduction to $1,000 a month if the following conditions were found to exist:

1. the Respondent lost his job at the steel mill;
2. he had not reached the age of 53 years and 9 months;
3. that he was left with income below $50,000 a year; and
4. he received no severance pay (which I interpret to be considered in the calculation of his income).

[ 9 ] If these circumstances, according to the agreement, were found to exist, the Respondent would be required to pay $1,000 a month in spousal support only, until he reached the age of 53 years and 9 months, the significance of which is the result of the pension valuation made during the settlement negotiations that established his entitlement to receive pension benefits at that age.

[10] The Respondent did lose his job at the steel mill on August 4, 2009, and was not re-elected as a municipal counsellor in November 2010. His income has decreased substantially. In 2009 his income was $150,946. In 2010, his income, from another employer and a prorated calculation of his severance package was $97,086.

[11] Currently, he is employed with Groupe Convex with a salary of $45,000. A significant issue arises as to the actual date of his entitlement to pension benefits. If he is entitled to receive pension benefits, as was determined during the valuation of his pension and reflected in the Protocole d’entente , at the age of 53 years and 9 months, receipt of these benefits could begin in May 2010. Based on annual pension benefits of $18,000, the figure used by counsel during submissions, the Respondent would find himself generating income on an annual basis of $63,000 currently. The Applicant concedes that for the period of January 1, 2011 to April 30, 2011, the Respondent’s termination at the steel mill, his age, and his income during those four months compel a reduction in spousal support to $1,000 per month, in accordance with paragraph 8 of the Protocole d’entente .

[12] During submissions on this motion, it became unclear as to the date of the Respondent’s entitlement to receive pension benefits. Correspondence from the pension administrators tended to show that the Respondent was ineligible until he attained the age of 55, that is on August 17, 2012. The possible application of current regulations to the Pension Benefits Act , as well as the existing terms of the pension plan needed to be determined. Counsel were accordingly provided an opportunity to further inquire into this feature of the evidence and make further submissions. Repeated inquiries have determined that the Respondent is entitled to draw from his pension at age 53.79 years, as was originally determined and that his early termination from the steel mill is of no practical consequence to his pension.

[13] Counsel for the Respondent argues that in the face of the Respondent’s unexpected and early termination from the steel mill, his pension is underfunded by 17.5 % and that to require him to draw from his pension as soon as it is available represents, in effect, a capital displacement that is neither provided for in the agreement signed by the parties, nor authorized by law in relation to spousal support obligations. That statement of law is correct, however has no application to the present case for two reasons.

[14] Firstly, part of the negotiated settlement included the age of 53.79 years as the operative figure on income calculation quite apart from whether the Respondent continued to be employed or not at the steel mill. The loss of employment at the steel mill was factored in as one of four conditions which could compel a reduction in spousal support, however it was not, in the agreement, connected to the Respondent’s pension entitlement or availability. These are the terms to which the parties agreed. This agreement, as in any negotiated settlement, involved, as previously set out, advantages to and concessions by both parties. The terms cannot at this juncture be isolated and reconsidered. This would undermine and compromise the settlement process and in the long run severely impair the prospects of parties resolving their differences in the most efficient and cost-effective manner, without the need for Court intervention.

[15] Secondly, and on a more practical level, the Respondent’s pension is not affected by his early termination, that is prior to his attaining the age of 53.79 years. In the present case, the Respondent’s age and years of service have resulted in an amount transferred to the locked in account of Mr. Greffe based on the commuted value of an unreduced pension, as of 53.79 years of age.

[16] There is accordingly, no reason for this Court to interfere with the terms of spousal support obligations, based on pension considerations. The operative figure of 53.79 years of age remains the working date for the purposes of determining whether the terms agreed upon should compel a reduction in spousal support. Moreover, if the value of the pension or the benefits derived therefrom were reduced as a result of early termination, the practical impact on the Respondent’s available income and the consequence in capital terms, of an underfunded pension, would have to be calculated in its specific consequences, to determine whether any such reduction would represent a material change, compelling a variation of an agreed upon formula for spousal support calculations.

[17] On the larger issue of whether a material change of circumstances has occurred and whether the terms of the order and agreement should be varied, I am unable to conclude that the conditions required for such a variation have been met, for the following reasons. The loss of employment at the steel mill was not unforeseeable. The agreement contemplated exactly such an eventuality. A formula for reviewed spousal support was specifically put in place to deal with such a turn of events. Seldom are separation agreements so precise and prescient in their terms. The Respondent fully informed and well-represented agreed to these terms, no doubt in consideration of the benefits that the agreement conferred in terms of reduced support payments, both in terms of quantum and duration.

[18] It would be inappropriate to examine the Respondent’s income presently in isolation of the surrounding circumstances, including the respective financial positions of the parties since the agreement was signed. The Respondent earned $159,796 in 2008. He earned $150,946 in 2009 and $97,086 in 2010. During that period of time, the financial statements and other documents have the Respondent enjoying relative comfort including frequent trips and the purchase of a $45,000 car. The Respondent is entitled to lead the lifestyle he chooses, however, he does so at his own peril, in relation to the ongoing, and agreed upon support obligation he has.

[19] As the separation agreement foresaw the possibility of hard economic times, so too was the Respondent expected to plan for that possibility. The agreement does not specifically require the Respondent to maintain a reserve from which to draw in the event that his income decreased dramatically, however, the Applicant cannot be penalized because of the Respondent’s failure to do so.

[20] The Applicant’s concession for $2,000 a month for 9 years in the face of a possible award of a much greater amount for an indeterminate period of time was based on the assumption that she could, at the very least, count on what was bargained for. That the Respondent chose to benefit himself from the financial latitude the agreement gave him during his employment at the steel mill cannot enure to the Respondent’s detriment presently.

[21] The agreement was arrived at with the benefit of counsel, following negotiations and mediation. It promotes the objectives of the Divorce Act including a recognition of the economic disadvantages to the Applicant arising from the marriage and its breakdown, relief from economic hardship flowing from the separation, and, to the extent possible, the promotion of eventual economic self sufficiency. Both the Divorce Act and the Family Law Act include provisions allowing the Court to vary a previous order or agreement if there has been a material change in the parties’ circumstances after the order has been made or the agreement has been reached. A material change of circumstances is a condition precedent in a variation application. What constitutes such a change in circumstances was addressed in the context of child support in Willick v. Willick 1994 28 (SCC) , [1994] 3 S.C.R. 670, in the following terms:

“[The Act ] authorizes the Court to vary a previous support order if a change of circumstances occurs. The approach that a Court should take is to determine first whether he conditions for variation exist and if they do exist what variation of the existing order ought to be made in light of the change in circumstances. In deciding whether the conditions for variation exist, it is common ground that the change must be a material change of circumstances. This means a change, such that if known at the time, would like have resulted in different terms. The corollary to this is that if the matter which is relied on as constituting a change was known at the relevant time it cannot be relied on a basis for variation.”

[22] The same observations were made in the context of spousal support in G. (L.) v. B. (G.) 1995 65 (SCC) , [1995] 3 S.C.R. 370. This principle is further developed in L.M.P. v. L.S. (2011) S.C.C. 64 at paragraphs 36 to 39:

(36) The threshold variation question is the same whether or not
a spousal support order incorporates an agreement: Has a
material change of circumstances occurred since the making
of the order? ( See Willick ; G. (L.); Leskun v. Leskun , 2006 SCC,
2006 SCC 25 () , [2006] SCC 25 , [2006] 1 S.C.R. 920 .)

(37) This does not mean that the incorporated agreement is
irrelevant. As Sopinka J. observed in Willick , “[W]here…
the agreement is embodied in the judgment of the court,
it is necessary to consider what additional effect is to be
accorded to this fact” (p. 687).

(38) The agreement may address future circumstances and
predetermine who will bear the risk of any changes that
might occur. And it may well specifically provide that
a contemplated future event will or will not amount to
a material change.

(39) Parties may either contemplate that a specific type of
change will or will not give rise to variation. When a
given change is specified in the agreement incorporated
into the order as giving rise to, or not giving rise to,
variation (either expressly or by necessary implication),
the answer to the Willick question may well be found
in the terms of the order itself. That is, the parties, through
their agreement, which has already received prior
judicial approval, have provided the answer to the Willick
inquiry required to determine if a material change has
occurred under s. 17(4.1). Even significant changes may
not be material for the purposes of s. 17(4.1) if they were
actually contemplated by the parties by the terms of the
order at the time of the order. The degree of specificity
with which the terms of the order provide for a particular
change is evidence of whether the parties or court
contemplated the situation raised on an application for
variation, and whether the order was intended to capture
the particular changed circumstances. Courts should give
effect to these intentions, bearing in mind that the
agreement was incorporated into a court order, and that
the terms can therefore be presumed, as of that time, to
have been in compliance with the objectives of the
Divorce Act when the order was made.

[23] The agreement reached by the parties contemplated the possibility of a significant reduction in the Respondent’s income, and a reduced support obligation if this occurred. The threshold agreed to by the parties has not been met. A material change in circumstances, if provided for in an agreement, cannot by definition be unforeseen as required in order to compel a variation of the agreement pursuant to Willick and cases subsequently decided on this issue.

[24] The agreement was an efficient and effective method by which the parties could settle their financial differences after 25 years of marriage without the delays, stress and cost associated with litigation, and placed both parties in a position of being able to foresee their financial future until August 2017.

[25] I am therefore of the view that the Respondent has not met the onus imposed upon a party seeking to vary an order on an agreement, largely on the basis of the obvious foreseeability of the change relied upon in this motion, as reflected in the agreement itself.

[26] In arriving at this conclusion, I have not place any weight on the evidence of the Respondent’s conduct since the order of June 2008, including his unilateral decisions previously to reduce the support payable to $1,000 per month, or his earlier motion to vary. While such evidence could be seen as symptomatic of a party making all efforts to avoid his spousal support obligations, the consideration of such a submission is entirely unnecessary in the face of the clear, unambiguous, eminently fair and mutually agreed upon terms of spousal support as reflected in both the agreement and the order of 2008.

[27] The motion to vary is accordingly dismissed. As indicated during the submissions of the Applicant’s counsel and observed earlier in these reasons for judgment, the Respondent’s spousal support obligations for January 1, 2011 to April 30, 2011 are reduced to $1,000 per month.

[28] Any outstanding arrears are to be paid forthwith unless the parties are able to agree upon a schedule that is expected to be strictly adhered to. Cost submissions may be exchanged and filed within 30 days.

[29] ORDERS:

1. Respondent’s motion to change the order of Justice Michel Charbonneau dated June 4, 2008 and the agreement between the parties for spousal support dated April 21, 2008, filed with the Court June 4, 2008 is dismissed;

2. On consent, the Respondent’s spousal support obligations for the months of January, February, March and April 2011 is reduced to $1,000 per month;

3. Any outstanding arrears in spousal support are to be paid forthwith unless the parties can agree upon a payment schedule;

4. Cost submissions for this motion may be exchanged and filed within 30 days of the release of these Reasons for Judgment. Cost submissions not to exceed 2 pages in addition to any accompanying documents.

Justice Robert Pelletier

Released: February 9, 2012

COURT FILE NO.: 388-2007
DATE: 2012/02/09

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Micheline Greffe AND Gilles Greffe REASONS FOR JUDGMENT on a motion to change an order and agreement for spousal support Justice Robert Pelletier

Released: February 9, 2012