ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS-10-0096-00
DATE: 2013-07-02
B E T W E E N:
Karen Margaret McConnell
Ms. M. deSouza, for the Applicant
Applicant
- and -
David Robert McConnell
Self represented
Respondent
HEARD: April 17 – 18, May 31, and June 18, 2013, at Thunder Bay, Ontario
Regional Senior Justice H.M. Pierce
Reasons for Judgment
Introduction
[1] The parties were married in 1974 and separated in January, 2008. By the time of the trial, they had been separated for 5 ½ years. They have four children who were born between 1983 and 1989. James is the youngest child. He continues to live with his mother and now receives a disability pension. He pays room and board. The other children are independent.
[2] For convenience, I shall refer to Ms. McConnell as “the wife,” and Mr. McConnell as “the husband.”
[3] By agreement of the parties, the husband’s obligation to pay child support of $1,153 per month for James ended on January 31, 2011. James began to receive an ODSP benefit in February, 2011. An order was made at the conclusion of trial terminating child support accordingly. The parties have reached an agreement to equalize their net family property.
[4] The principal issue to be decided at trial is the quantum and duration of spousal support for the wife. She seeks indefinite spousal support in the same amount as ordered on an interim basis: $3,600 per month, as well as indexing. She also seeks an order fixing arrears of support at $60,491.51 as of May 23, 2013, with her husband to be given credit for any payments made since that time.
[5] The husband does not dispute his wife’s entitlement to spousal support, but takes issue with the quantum claimed. He points to the equalization of his former employment pension which his wife will soon receive; as well, he submits that he has paid and continues to pay the parties’ debts from separation that should be credited against support arrears. There is no application before the court to cancel arrears.
[6] Mr. McConnell did not submit what the quantum of spousal support should be. He objects to indexing spousal support on the grounds that his wife will receive indexed income from Canada Pension and Old Age Security once these are available to her. He also submits that his wife will receive a lump sum from the pension division that may grow upon investment. Further, he argues that his own income will not be indexed so he will not have the income to pay indexing on top of spousal support. He is receiving superannuation from his former employer on a monthly basis.
Analysis
[7] The wife will be 60 years old on September 19, 2013. She has not worked outside the home since 1983 when the parties’ first child was born. She functioned as a homemaker since that time. The husband concedes that she has back problems, to the extent that she required surgery. Unfortunately, the surgery was not successful. The wife contracted an infection in hospital for which she continues to take medication.
[8] As well, the husband does not dispute that his wife has mental health issues of such severity that she required several hospitalizations in the past. I conclude that, given her age, her physical and psychological conditions, and her absence from the work force since 1983, it is unlikely that Ms. McConnell could return to the work force. Since separation, she has been wholly dependent on her husband. The wife is a beneficiary of her husband’s health and dental plan through his superannuation. The husband does not object to this coverage continuing. He understands that the coverage will cease should the parties divorce.
[9] Mr. McConnell testified that his wife will be eligible for Canada Pension benefits once she turns 60 in September, as the CPP credits have been split following separation. Currently, the husband pays some spousal support out of his CPP income. The wife has not applied for a Canada Pension disability pension.
[10] Ms. McConnell did not testify about her entitlement to her husband’s superannuation pension, although the pension was valued pursuant the equalization of property following separation. Mr. McConnell testified that once his superannuation is divided with his wife, his income from it will drop significantly. All but three years of the pension were earned during the marriage.
[11] Mr. McConnell is 63 years old. He was born on October 23, 1949. He worked for many years at the Grain Commission in Thunder Bay, retiring on May 31, 2011. He receives a superannuation which will be divided with the wife, pursuant to a property division between the spouses. Until the pension is divided, the husband receives annual gross income of $41,000 from the Grain Commission plus annual Canada Pension of $8,888.40.
[12] Following his retirement in 2011, the husband accepted full-time employment as a shipping inspector with Mission Terminal where he continues to be employed. He is in good health and plans to work until he is 70. A significant issue in this trial is the amount of income the husband can reasonably be expected to earn from his current employment. Mr. McConnell says that he took his present job in order to pay off debts from the marriage and that this additional income should not be encroached upon for the payment of spousal support.
[13] The onus is on the husband to prove his income. If he does not do so, the court may draw an adverse inference.
[14] The husband’s pattern of earnings shows that he accepts any available overtime in order to augment his income. However, he testified that the amount of regular hours and overtime available is reduced in 2013, due to a downturn in shipping. He says that competition among workers for those extra hours means that his income will be reduced this year. Presumably his income will increase if shipping traffic increases. He projects that his income from employment for 2013 will be $60,000. Of course, he will have Canada Pension and a share of superannuation besides.
[15] Although the husband’s income tax returns and notices of assessment for the years 2009 -2011 are in evidence, there is not a pattern of income that allows for a meaningful projection of his income in 2013. This is because he has changed employers, received severance from the Grain Commission, withdrew from an RRSP and generally accessed non-recurring income during those three years. For example, his total income in 2011 was $184,638; in 2010, $173, 715; and in 2009, $137,115.
[16] The husband’s tax return for 2012 discloses total income of $137,030.41. This is comprised of the employment income of $87,158.65, CPP of $8,888.40, and superannuation income of $40,983.36.
[17] According to the husband’s 2012 year-end pay stub, the breakdown of his 2012 income from Mission Terminal is as follows: regular hours: $53,520.45; overtime: $24,966.05; bonus: $2,275; vacation: $3,352.30, and banked time of $3,044.85. These stubs show an hourly rate of $29.50 per hour.
[18] His year-to-date income on the May 19, 2013 paystub shows gross income of $24,948.92 for a twenty week period. This amount is based on regular wages of $18,155.78; overtime of $2,313.39; bonus of $2,400; and banked time worth $2,079.75. These pay stubs show a slight wage increase to $30.09 per hour. A projection of this income indicates the husband can expect to earn approximately $64,867.19 from employment in the current year.
[19] But that is not the end of the matter. Mr. McConnell received unpaid vacation valued at $3,352.30 in 2012. The May 19, 2013 paystub does not show any accrued value for annual vacation. However, the husband testified that instead of accepting a lay-off in 2013, he would take two weeks of vacation time. He did not indicate how many weeks of annual vacation he is entitled to take. I infer that he may be entitled to some modest amount of unpaid vacation by year-end.
[20] No witnesses were called from Mission Terminal to corroborate the husband’s evidence that his income for the current year would be reduced. However, the husband did file an undated, unsigned paper that he stated he received from his employer, referring to a reduction in employment hours. His paystub corroborates his testimony that he banked some time in order to continue his income stream during eight weeks of projected lay-off.
[21] The husband was vague in his testimony about the availability of overtime. He testified that this is the first time the terminal has ever had to lay-off workers in the spring and the fall and that the allocation of overtime work is the prerogative of the manager. Nevertheless, his May 19th paystubs shows overtime of $2,313.39. Thus, it is evident that the husband is still asked to work overtime despite slow shipping conditions.
[22] While it is tempting to apportion the number of weeks worked applied to 2012 income, I am not persuaded this would be a fair result. The husband’s overtime earnings at the twenty week point of this year are substantially down from the previous year. He has eight weeks of lay-off ahead during the summer shipping season. It is likely that overtime commensurate with summer shipping will also be lost to the husband. For that reason, I conclude that the husband’s income from Mission Terminal is likely to be reduced from 2012. I find his income will be in the range of $68,000 for 2013 when vacation pay is factored in.
[23] Before the husband’s Canada Pension and superannuation are divided with the wife, I find that his annual income will be approximately $118,000 from all sources. In little more than a year, he will be eligible to receive an Old Age Security pension.
[24] The husband did not file an updated financial statement at trial, as the Family Law Rules require. Instead, he filed a financial statement sworn July 26, 2012.
[25] The financial statement discloses outstanding debts of $142,696. Of those debts, $70,000 represents arrears of child and spousal support. The husband did not file an updated list of debts or supporting documentation at trial. Once calculated, the order terminating James’ child support in the amount of $1,153 per month effective January 31, 2011 will significantly reduce the husband’s support arrears.
[26] Mr. McConnell testified that his debt load for credit cards reduced from between $91,000 - $92,000 at separation to $24,000 currently. These consist of a $6,000 Visa account and an $18,000 Bank of Montreal account. He also has less than $3,000 in short term loans that he hopes to pay off before he stops working.
[27] The Director’s statement of arrears from the Family Responsibility Office shows that child and spousal support did not begin to accrue until December, 2010 even though it was ordered in May, 2010. The wife moved out of the matrimonial home in September, 2009. Thus, the husband had a support holiday of approximately$4,753 per month for nine months after the wife left the home. Although accrual began from the date of the support order, collection did not begin until March of 2011.
[28] It is hard to understand how a person making Mr. McConnell’s income could be so deeply in debt at and after separation. The matrimonial home has been sold. Had the husband used the hiatus in support payments to pay down family debts, they would have been nearly retired by the time he began to pay support. In the absence of support, the wife borrowed from her life insurance policy to pay her expenses, and then applied for welfare benefits.
[29] The husband began a new relationship with a woman who is in receipt of a disability pension. She lives in his apartment but makes no contribution to rent or household expenses. He testified that he had expenses for the house and some for his new relationship after separation, in the amount of about $20,000 - $30,000. He indicated that he gave her some financial assistance for her problems with drinking and drugs. He cannot argue that debts incurred on his new partner’s behalf should justify reduced spousal support payments. The husband’s obligation to his new partner does not trump his responsibility to provide his former spouse with a decent standard of living.
[30] The husband testified that he has had some changes in his expenses as well as his income. He indicated that as a result of not breaking down child and spousal support payments in his 2011 tax return, he was charged extra tax. Nevertheless, he stated that when he re-filed, he expected his tax liability would be reduced, adding that he would still have tax to pay.
[31] He testified that by no longer paying for car insurance for his wife and son in the amount of $6,000 per year, his premium has dropped to $1,800 per year. However his financial statement claims the premium is $1,968. No proof of premium was filed. He also testified that the premium had increased from $164 per month to $178 per month. Without documentary proof of these expenses, the court is left to guess what they are.
[32] The husband also testified that his rent has increased from $716 per month to $733 per month. His 2012 income tax return claims rent of $8,529 was paid during 2012, an amount of $710.75 per month. Perhaps there is an explanation for this discrepancy; however, in the absence of receipts, the court is left to speculate.
[33] The husband testified that as a result of a vehicle lease in April, 2011, his car expense has dropped to $322.68 per month.
[34] In my view, the wife is entitled to support and the husband has demonstrated he can afford to pay it. The parties have had a long-term marriage, during which the wife assumed the role of home maker and the husband assumed the role of bread-winner. She is unable to earn any significant income because of her age, health, and time out of the work force. Now that the children are raised, Ms. McConnell has first claim on her husband’s earning capacity. The wife submits that a continuation of the interim spousal support award of $3,600 month is warranted until the husband’s superannuation and Canada Pension are divided with her. It is impossible to know when division will occur.
[35] The Spousal Support Advisory Guidelines prescribe a larger amount of support based on the income findings I have made. Oddly, Ms. McConnell’s counsel submitted that she was aware that her client was entitled to more but said that she was not claiming more. None of the wife’s Spousal Support Advisory Guideline calculations approximate the findings I have made.
[36] Until the husband’s superannuation and Canada Pension are divided with the wife, the husband shall pay to the wife the sum of $3,600 per month commencing July 1, 2013.
[37] Once the superannuation and Canada Pension are divided, Mr. McConnell’s capacity to support Ms. McConnell will be reduced. In the absence of evidence, I have considered that the current superannuation benefit and Canada Pension benefit will be equally divided between the parties. The support ordered is indefinite, as opposed to time-limited. However, recognizing the age of the parties and the likelihood that Mr. McConnell will retire a second time from employment, the order is subject to review upon a material change in circumstances.
[38] On the basis that the CPP and superannuation are split at around the same time, Mr. McConnell shall pay to his wife the sum of $2,500 payable on the first day of the first month after the latest of the superannuation and Canada Pension is divided. The husband and the wife shall jointly advise the Family Responsibility Office in writing when the reduction in spousal support commences, pursuant to the terms of this order.
[39] In addition to the support ordered, the husband is ordered to maintain the wife on his health care benefits available through his superannuation so long as the plan permits.
[40] I am not satisfied that the facts of this case warrant an order for indexing spousal support. The wife will soon have control over a share of two of the husband’s three income sources. If they are indexed, she will get the benefit. If they are not, she and the husband will suffer the hardship. As to the husband’s income from employment, it is not indexed. As the evidence shows, his earning capacity is affected by shipping traffic. As well, his earning years are limited by his age. Many would not have returned to employment after a first retirement. The wife’s claim for indexing of spousal support is dismissed.
[41] As to the wife’s claim to fix arrears of spousal support, I decline to do so for these reasons. There are adjustments to arrears to be computed by the Family Responsibility Office as a result of the termination of James’ child support. Second, it was evident during the trial that there were some support payments that had been deducted from the husband’s cheque but had not yet been received by the wife or credited by the Family Responsibility Office. To consider these “in the pipeline” payments when fixing support arrears would risk wrongly crediting one party at the expense of the other party.
[42] The husband does not take issue with the state of accounts prepared by the Family Responsibility Office. He has not claimed a reduction in arrears. He does not ask for a cap on the amount that can be taken from his income monthly for arrears. There is therefore no advantage to either party in having the court fix arrears. There is a positive disadvantage in courting an arithmetical error by doing so. The wife’s claim to fix arrears is dismissed.
[43] If the parties cannot agree on costs, the parties may obtain an appointment from the trial coordinator within thirty days of the release of these reasons, in order to argue costs. If they do not do so, costs will be deemed to be settled. Costs submissions are not to exceed five pages.
Regional Senior Justice H.M. Pierce
Released: July 02, 2013
COURT FILE NO.: FS-10-0096-00
DATE: 2013-07-02
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Karen Margaret McConnell
Applicant
- and –
David Robert McConnell
Respondent
REASONS FOR JUDGMENT
Pierce, RSJ
Released: July 02, 2013
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