ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 4692/96 M1
DATE: 20130826
BETWEEN:
James David Gray
– and –
Kathleen Janet Gray
Carol A. Allen, for the Applicant
Erroll G. Treslan, for the Respondent
HEARD: June 13, 14, 2013
REASONS FOR JUDGMENT
Conlan J.
Introduction
[1] James and Kathleen Gray have been battling each other in Court for about fifteen years now. Hopefully, this is the final round.
[2] On January 7, 2005, Thompson J. made a Final Order which included a child support obligation on the part of the Applicant, James David Gray (“Mr. Gray”).
[3] On March 14, 2011, Mr. Gray brought a Motion to Change that Final Order of Justice Thompson. Specifically, Mr. Gray asked that his child support obligation for the four children be terminated. The four children of the marriage are daughter K, born April 9, 1981, son A, born February 18, 1983, son W, born October 27, 1988 and son J, born November 9, 1990.
[4] In the course of responding to that Motion to Change, the Respondent, Kathleen Janet Gray (“Ms. Gray”), has queried whether there should be a change to the Final Order/Divorce Judgment of Thompson J. made on May 21, 1998. That Order included a spousal support obligation on the part of Mr. Gray - $800.00 per month.
[5] On April 20, 2012, Justice Herold made a Temporary Order to terminate child support payable by Mr. Gray on April 30, 2012. That Temporary Order also provided that Mr. Gray pay spousal support in the amount of $3,000.00 per month.
[6] This was a short trial. It took place in Owen Sound on June 13 and 14, 2013. The only two witnesses called to testify were the parties themselves. I thank counsel for their able closing submissions, made in writing and supported by Books of Authorities, received by me in July 2013.
The Evidence at Trial
Mr. Gray
[7] Mr. Gray is 59 years old.
[8] For close to one year now, he has lived in Indiana, United States of America, with his wife and three young children. Prior to the family’s relocation to Indiana, they lived in Collingwood, Ontario. Both homes have very sizeable mortgages attached to them. The Collingwood home is listed for sale at $684,000.00.
[9] Mr. Gray works for a company called Closure Systems International. He started with that company at its Feversham, Ontario location in 2003.
[10] Since 2005, Mr. Gray’s employment income has been $144,500.00 gross plus an optional bonus. Those monies were paid in Canadian funds until July 2012, when he started working in Indiana. He is currently the sole income earner in the household.
[11] In 2012, Mr. Gray’s total gross income was comprised of two figures - $98,953.14 as reflected on his Canada Revenue Agency T4 and $113,995.62 as shown on his Internal Revenue Service document, although that year was an anomaly because the amounts included as much as $40,000.00 for moving costs.
[12] Mr. Gray currently has about $87,000.00 in investments and savings.
[13] Mr. and Ms. Gray were married in June 1980.
[14] Mr. Gray testified that he decided to end the marriage in late 1994, although he elected to stay in the relationship for a short while after Ms. Gray was diagnosed with leukemia in early 1995. Mr. Gray points to December 1994 as the separation date and the last time that the parties had conjugal relations.
[15] The ultimate separation of the parties led to what Mr. Gray described as being a protracted, complicated and litigious court battle between the parties which included numerous Court Orders being made and convoluted enforcement efforts by the Family Responsibility Office concerning child and spousal support.
[16] As a further complicating factor, Mr. Gray filed for bankruptcy in 1998 and was involved in separate court proceedings related to that. He remains an undischarged bankrupt.
[17] It is clear that the parties do not agree on what some of the Orders even meant to say. For example, there was a Final Order made by Justice Thompson on January 7, 2005. The preamble to that Order indicates that it was made “upon Justice Thompson receiving written submissions on the issue of costs as specified in his Order dated November 10, 2004 and on the Court’s own accord to clarify a number of issues arising from the November 10, 2004 Order”. Paragraph 1 of that Order provides as follows in the final sentence: “then, commencing on September 1, 2005 and monthly thereafter, the Petitioner/Applicant shall pay to the Respondent as child support the sum of $3,429.00 per month”.
[18] Mr. Gray asserts that the $3,429.00 per month was for child support (base and section 7 Guidelines expenses) and spousal support.
[19] At my suggestion, efforts were made to see if transcripts were available which may shed some light on whether the $3,429.00 monthly figure was intended to include both forms of support. The only transcript available and provided to counsel and to the Court was from the appearance before Justice Thompson on 29 October 2004.
[20] I shall return to this matter later in these Reasons for Judgment when I deal with the issues in dispute.
[21] In his examination in chief, Mr. Gray testified that support for his children ought to have terminated as follows: in early 2005 for his daughter K (when she was finished at University); in the Spring of 2006 for his son A (when he was finished his University); in late 2007 for his son W; and in the Spring of either 2012 or 2013 (Mr. Gray gave both years in his testimony) for his son J.
[22] In terms of section 7 special and extraordinary expenses for his children, Mr. Gray’s chief complaint is with regard to the exorbitant private school costs.
Ms. Gray
[23] Ms. Gray is 58 years old.
[24] Ms. Gray is in receipt of long-term disability benefits and Canada Pension Plan benefits. She is not working outside of the home.
[25] In September 1979, Ms. Gray commenced her employment with the predecessor of Air Canada. Her last working day as a flight attendant was December 31, 1994. On that date, she was admitted to a hospital emergency department for a suspected heart attack. She was diagnosed with leukemia and told that she would not survive beyond January 1995. She has never been employed since that New Year’s Eve.
[26] Evidently, Ms. Gray proved those doctors wrong. She is a resilient and courageous lady, thanks in part to a stem cell transplant, courtesy of her sister.
[27] Ms. Gray described her health currently as “fragile”. She has an auto-immune disorder. She receives ongoing medical treatments including blood injections. She has difficulties with her skin, eyes and hips. She is qualified to teach at school but cannot do so for health reasons.
[28] According to her June 2013 Financial Statement, Ms. Gray’s 2012 gross income was $49,563.00.
[29] At the time of trial, Ms Gray received $1,022.70 gross per month in CPP benefits, plus $1,315.31 gross per month in LTD benefits. The latter amount just increased to $1,600.00 per month.
[30] Ms. Gray lives in Meaford in the home that she shared with Mr. Gray and the children. There is about $67,000.00 in equity in that home.
[31] In cross-examination, Ms. Gray acknowledged that she travelled abroad quite extensively and donated money to charities in the last several years. It should be noted that Ms. Gray receives sizeable discounts on travel because of her complimentary Air Canada flight pass.
[32] Ms. Gray owns other assets for which the Court has no information as to the value of, including a joint interest in a timeshare in Hawaii and title to a cottage in Ontario for which her elderly mother enjoys a life interest.
[33] Ms. Gray disagrees with Mr. Gray as to the date of separation. She says that it was late July 1996, when Mr. Gray served her in the hospital with the Petition for Divorce.
[34] Ms. Gray testified that the $800.00 per month in spousal support ordered by Thompson J. in May 1998 was less than what she was entitled to but ordered nonetheless so that more money went to the children for their support.
[35] It is noteworthy that paragraph 4 of the said Judgment in May 1998 does include these words: “this Court orders and adjudges that the Petitioner shall pay spousal support to the Respondent in the amount of $800.00 per month commencing May 20, 1998. That quantum of support is less than is required by the Respondent but is ordered in accordance with 15.3(2) of the Divorce Act”.
[36] Ms. Gray testified that the child K graduated from University in the fall of 2005. The child A graduated from University in the spring of 2007.
[37] The children attended private or independent school for grade 13. The costs of that school are summarized by Ms. Gray as part of her calculations of all of the special and extraordinary costs that she has borne for the benefit of the children – Exhibit 3, volume 2 at tab 61.
[38] The private school costs are truly exorbitant. In cross-examination, Ms. Gray confirmed the following expenses paid by her: about $35,000.00 for A (and Ms. Gray received child support from Mr. Gray while A was away at the independent school); approximately $30,000.00 for W; and about $40,000.00 for J.
[39] W has some learning challenges. He attended private or independent school for grade 13, then Fanshawe College which was not completed (Mr. Gray paid child support for W while W was living in London), and then to Algonquin College for an electrical program. W is currently enrolled at Lakehead University.
[40] J very recently graduated with a four-year degree in commerce, management and economics. J spent five years completing that program.
[41] When asked when she thought child support ought to have been terminated, Ms. Gray said April 30, 2012 for the youngest two children W and J (as ordered by Herold J.), May 1, 2007 for the child A, and September 1, 2005 for the oldest child K.
[42] Ms. Gray vociferously disagrees with Mr. Gray’s assertion that the $3,429.00 per month ordered by Justice Thompson in January 2005 included any spousal support. She says that the $800.00 per month in spousal support ordered by Thompson J. in May 1998 survived the November 2004 and January 2005 Orders.
[43] For tax purposes, Ms. Gray claimed as non-taxable child support all amounts received from the Family Responsibility Office up to the amounts indicated in clause 1 of Thompson J.’s Order made in January 2005 (for example, the $3,429.00 per month). Funds received by Ms. Gray in excess of those amounts were claimed by Ms. Gray as taxable spousal support.
[44] Ms. Gray acknowledged in cross-examination that the Family Responsibility Office documentation shows that, since August 2011, arrears of support owing by Mr. Gray have been very low. At times, support has been overpaid. Of course, Ms. Gray would explain this in part by saying that the May 1998 Order of Thompson J. was not being accounted for.
The Positions of the Parties
[45] Each counsel did a commendable job at tying his/her client’s closing written submissions to the opening addresses.
[46] In a nutshell, Mr. Gray takes the position that he has overpaid child support for the four children since 2006. He wants child support terminated.
[47] Mr. Gray also wants spousal support terminated. Alternatively, he wants there to be no change to the May 1998 Final Order made by Justice Thompson ($800.00 per month spousal support in favour of Ms. Gray).
[48] Ms. Gray asserts that, for seven years between May 2005 and April 2012, no spousal support was collected by the Family Responsibility Office, despite the Final Order of Thompson J. made in May 1998. She argues that Mr. Gray is in arrears of spousal support in an amount just under $80,000.00.
[49] Going forward, Ms. Gray wants to be paid $4,302.00 per month in spousal support.
[50] In her final written submissions, Ms. Gray requests that child support be terminated effective April 30, 2012 (as per the Temporary Order made by Herold J.). That position is different than what Ms. Gray said in her testimony at trial.
[51] If I decide that child support ought to have terminated earlier than what Ms. Gray says, then Ms. Gray advances a claim of set-off. In particular, she argues that any overpayment by Mr. Gray ought to be reduced by what he underpaid in section 7 Guidelines expenses for the benefit of the children.
[52] It is obvious to me that these parents have very different ideas about the degree to which their children ought to be self-sufficient. I am not suggesting that one parent’s views are more responsible than the other’s, however, the divergence in philosophies is palpable.
[53] For example, Ms. Gray testified that she has no budget and gives away all or almost all of her money to her children. When the children had summer jobs, they were not expected to spend the money that they earned on their post-secondary school.
[54] Mr. Gray would have taken a very different approach. I am confident of that.
Analysis
[55] To ensure that I deal with all of the issues raised by both parties, I have borrowed from the closing written submissions, including those filed in reply by Mr. Gray, the wording of the topics.
[56] I have reviewed and considered all of the jurisprudence filed in the parties’ Books of Authorities.
Issue Number One Raised by Mr. Gray – Has There Been a Material Change in Circumstances Warranting a Variation to the Final Order/Divorce Judgment of Justice Thompson dated May 21, 1998?
[57] This matter is not disputed. On consent, I find that there has been a material change in circumstances since that Order was made.
Issue Number Two Raised by Mr. Gray – Should Mr. Gray’s Spousal Support Obligation be Terminated?
[58] First, a few words about the law of spousal support generally.
[59] The current law of spousal support in Canada offers a fairly expansive basis for entitlement. Generally, if there is a significant income disparity between the parties after separation, there will be an entitlement to some spousal support.
[60] The decision of the Supreme Court of Canada in Moge v. Moge, 1992 25 (SCC), [1992] 3 S.C.R. 813, created a broad basis for compensatory claims for spousal support based on economic disadvantage from the marriage or the conferral of an economic advantage on the other spouse.
[61] In Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420, the need basis for spousal support was outlined by the Supreme Court of Canada. A spouse may advance a non-compensatory claim based on need or hardship created by the loss of the marital standard of living.
[62] In determining the length of the relationship for spousal support purposes, the Court should look to the start of cohabitation, even before marriage, to the date of separation. The simplest approach is to round up or down to the nearest full year.
[63] “Indefinite” spousal support does not mean permanent spousal support. It simply means that the order is without a time limit at the time that it is made. Indefinite support orders remain open to variation as the circumstances of the parties change, and the orders may have review conditions attached to them. In other words, indefinite spousal support means support that is subject to the normal process of variation and review.
[64] Indefinite spousal support orders are more common in long marriages (twenty years or more).
[65] A strong compensatory claim generally favours a spousal support award at the higher end of the ranges regarding both duration and quantum. Similarly, a strong compelling need on behalf of the recipient will generally result in a spousal support award that is longer and higher in amount. There are other factors that affect duration and quantum, and some of these considerations are specified in the Divorce Act: age, number, needs and standard of living of children; needs and ability to pay of the payor; work incentives for the payor; property division and debts; and self-sufficiency incentives.
[66] I am not satisfied on balance that there is currently or has ever been since separation an entitlement to spousal support by Ms. Gray on a compensatory basis.
[67] But I am satisfied on balance that there remains currently an entitlement to spousal support by Ms. Gray on a need basis. Her current income is a small fraction of what the marital standard of living was prior to separation. Her current income is a small fraction of Mr. Gray’s. Her health remains precarious. I have no reason to impute any income to her. And she has very limited assets of a known value.
[68] Spousal support payable by Mr. Gray to Ms. Gray will continue. It shall not be terminated at this time.
Issue Number Three Raised by Mr. Gray – What is the Appropriate Quantum and Duration of Spousal Support?
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Issue Number Two Raised by Ms. Gray – Request for Variation/Termination of Spousal Support
[69] Regardless of whether one accepts that the date of separation was in late 1994 or in the summer of 1996, it is a fact that Mr. Gray has now been the subject of a spousal support obligation for more than fifteen years and for approximately the same length of time as the duration of the marriage itself.
[70] It seems to me that Mr. Gray should not have to continue to pay spousal support indefinitely.
[71] I decline, however, to fix a firm termination date at this time. Ms. Gray’s fragile health situation makes it dangerous for me to forecast what the next few years will bring.
[72] What I will do is direct that the matter of spousal support may be brought back to Court for review upon a material change in circumstances or, in any event and regardless of whether a material change can be proven on balance, not earlier than August 1, 2016. That means that there exists the possibility that spousal support will terminate after three years from now and, thus, Ms. Gray should plan accordingly.
[73] In terms of quantum of spousal support, I agree with the position advanced by Mr. Gray. I do not think that it is fair or reasonable for the Court to award Ms. Gray an amount of monthly spousal support substantially higher than what was ordered by Thompson J. in May 1998 to somehow retroactively compensate Ms. Gray for what may have been an initial award of spousal support ($800.00 per month) lower than what could or ought to have been made.
[74] There is no need to blur the two issues. We ought to deal with arrears separately.
[75] Further, I agree that Mr. Gray’s financial responsibilities to his new family have increased significantly since the family’s relocation to Indiana and his current wife’s unemployment. That is a relevant consideration in terms of assessing what is a reasonable quantum of spousal support in favour of Ms. Gray. Fisher v. Fisher, 2006 4950 (ON SC) at paragraph 45.
[76] Ms. Gray’s need for spousal support is no greater today than it was in May 1998. In fact, with the recent increase in her LTD benefits and the ages and stages of her children, it is arguable that her need is somewhat less.
[77] Considering all of the factors including those specified in the Divorce Act, I conclude that the alternative position advanced by Mr. Gray is a reasonable one – maintain the spousal support at what was initially ordered by Thompson J. This Court Orders that Mr. Gray shall continue to pay spousal support in favour of Ms. Gray in the amount of $800.00 per month subject to the indexing provided for at clause 4 of Justice Thompson’s May 1998 Judgment. If necessary, a fresh Support Deduction Order shall issue. There shall be no change to the payment schedule.
[78] In the event that this case returns to Court in the future, it is important that I state what I find to be the most reasonable inputs of a spousal support advisory guideline calculation, had I strictly applied those guidelines. I would have used a figure of $144,500.00 US funds for Mr. Gray’s gross income. I would have used a figure of $49,563.00 for Ms. Gray’s gross income. And I would have used 16 years as the length of the marriage/cohabitation.
[79] A few final comments are necessary regarding this topic. Ms. Gray relied heavily in her closing written submissions on the decision of the Ontario Court of Justice in Abernethy v. Peacock, 2012 ONCJ 145, [2012] O.J. No. 1203, affirmed on appeal by the Superior Court of Justice, [2013] O.J No. 1768. I accept that there are instances where the spousal support advisory guidelines’ without child support formula may be utilized in a variation proceeding where the quantum of spousal support originally ordered and sought to be varied was inadequately low and where the payor’s income has increased substantially since the original order was made.
[80] I find that the Abernethy, supra decisions are not helpful to me. First, I do not know what income for Mr. Gray was used to arrive at the $800.00 per month spousal support ordered by Thompson J. in May 1998, and thus, I cannot conclude how much his income has increased since that time. If I assume that the figure of approximately $102,000.00 was used (because that quantum is referred to elsewhere in the May 1998 Judgment), then it is clear that Mr. Gray’s current gross income of $144,500.00 US funds does not provide him with a substantially higher ability to pay spousal support when one considers his financial obligations to his current family. Second, in the decisions relied upon it was clear that the payee agreed to give child support priority over spousal support. That is not clear in the case before me. Although Ms. Gray testified that Justice Thompson gave child support priority over spousal support, the 1998 Judgment itself does not confirm that. Third, the facts were very different in the case referred to. As just one example, the marriage in that case was “traditional” while it was anything but in the case before me.
Issues Four and Five Raised by Mr. Gray – Termination of and Overpayment of Child Support
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Issue Number Two Raised by Ms. Gray – Request for Variation/Termination of Child Support
[81] The law regarding retroactive variations (including termination) of child support is not complicated.
[82] Where a parent requests a retroactive variation of child support, the Court ought to consider the same factors that are to be assessed when a parent advances a claim for retroactive child support, as espoused by the Supreme Court of Canada in D.B.S. v. S.R.G., 2006 SCC 37: the reasonableness of delay, the payor’s conduct, the child’s past and present circumstances and whether a retroactive award or variation would result in hardship.
[83] There is no dispute between the parties that the child K graduated from University in 2005. Ms. Gray herself testified that it would be reasonable to terminate child support for K effective September 1, 2005. I agree. I Order the same.
[84] The delay in bringing the Motion to Change in March 2011 has been adequately explained by Mr. Gray and, for the most part, conceded by Ms. Gray when she testified that she did not open or read any correspondence from Mr. Gray which may have dealt with the requested termination of child support for K. As such, I have determined that Mr. Gray shall be entitled to credit for overpaying child support for K on or after the termination date found above. The parties and counsel will have to cooperate in calculating that overpayment amount with the assistance of the Family Responsibility Office.
[85] There is no dispute between the parties that the child A graduated from University in either the Spring of 2006 (per Mr. Gray) or the Spring of 2007 (per Ms. Gray). I find that 2007 is likely more accurate as Ms. Gray seems to have a better memory of important dates in the lives of the children (including birthdates) compared to Mr. Gray. Ms. Gray herself testified that it would be reasonable to terminate child support for A effective May 1, 2007. I agree. I Order the same.
[86] As with the child K, I have determined that Mr. Gray shall be entitled to credit for overpaying child support for A on or after the termination date found above. The parties and counsel will have to cooperate in calculating that overpayment amount with the assistance of the Family Responsibility Office.
[87] The timetable is not as clear for the children W and J. W has been in and out of post-secondary school and still is enrolled at University. J took an extra year to recently complete a University degree. In the circumstances, I conclude that the safest, most reliable and most fair termination date to use is that decided by Herold J. – April 30, 2012. So ordered.
[88] Mr. Gray shall be entitled to credit for overpaying child support for W and J on or after the termination date found above. The parties and counsel will have to cooperate in calculating that overpayment amount with the assistance of the Family Responsibility Office.
Issue Number Six Raised by Mr. Gray – Is Ms. Gray entitled to a Retroactive Variation of Spousal Support?
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Issue Number One Raised by Ms. Gray – What Arrears of Spousal Support, if any, are Owed Under the 1998 Judgment?
[89] Speaking bluntly, my hunch is that the $3,429.00 as support provided for in the last sentence of clause 1 of Thompson J.’s January 2005 Final Order was intended to include both spousal and child support.
[90] I say that for two reasons and despite the fact that the transcript from the Court attendance on 29 October 2004 gives no indication to support that. First, Mr. Gray’s explanation in evidence that he was confused and asked Thompson J. prior to January 2005 to give him one global support number to pay makes sense to me. Second, I note that the wording of clause 1 of the said Final Order is curious and different than the wording used by Thompson J. in the May 1998 Judgment, for example. The words “as child support” in the January 2005 Order cause me to speculate that the $3429.00 was more than just child support but was described as such, possibly to provide some taxation benefit to Ms. Gray.
[91] In any event, I cannot act on a hunch or a guess or mere speculation. It was incumbent on Mr. Gray to satisfy me on balance that I should look past the plain wording of the January 2005 Order, and he has failed to meet that burden.
[92] On the evidence before me, I find that the amounts set out at paragraph 1 of Thompson J.’s Final Order made in January 2005 do not include the $800.00 per month in spousal support ordered by Justice Thompson in May 1998. In other words, those amounts are separate and apart from each other. I accept the position advanced by Ms. Gray that the $800.00 per month spousal support obligation survived and continued beyond the making of the January 2005 Final Order.
[93] Thus, I accept the calculations provided by counsel for Ms. Gray and find that Mr. Gray is in arrears of spousal support in the total amount of $79,807.32.
The Final Issue Raised by Mr. Gray – Is Ms. Gray Entitled to Retroactive Section 7 Guidelines Expenses?
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The Final Issue Raised by Ms. Gray – is Ms. Gray Entitled to a Set-Off Relating to Section 7 Expenses?
[94] This is a moot point. This claim was being advanced by Ms. Gray only if the Court decided to terminate child support earlier than what was being suggested by Ms. Gray. I have not done so.
[95] Even if the point was not moot, it is very unlikely that I would have awarded to Ms. Gray anything for retroactive section 7 expenses. Private or independent school costs for the children comprised a substantial percentage of those section 7 expenses paid for by Ms. Gray, and I have no hesitation in finding that those costs were not proper section 7 expenditures. It may be that the parties at some point early in their union decided that the children would attend private school, but the circumstances were very different when the costs were actually incurred many years later. Private school was not affordable. It was not reasonably necessary. And it was not agreed to by Mr. Gray at the time that the children attended and the costs were actually being borne.
Conclusion
[96] A Final Order shall issue in accordance with these Reasons for Judgment.
[97] There may be some mechanical issues yet to resolve as a result of my Reasons herein, such as how to deal with the overpayment of child support by Mr. Gray balanced against the spousal support arrears owing by him. I encourage counsel to settle those issues, failing which I may be spoken to.
[98] If the parties are unable to resolve the issue of costs, I may be spoken to through the trial coordinator in Owen Sound. It seems to me that success was somewhat divided in this case and, thus, counsel should consider whether no costs is an appropriate disposition.
[99] To Mr. and Ms. Gray, I earnestly hope that this spells the last round of the rumble. Otherwise, the parties will end up spending their twilight years in the same arena that they have been embroiled in for more than fifteen years. I wish them both health and happiness.
[100] I thank Ms. Allen and Mr. Treslan for a well presented trial.
(Original signed Conlan J.)
Conlan J.
Released: August 26, 2013
COURT FILE NO.: 4692/96 M1
DATE: 20130826
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: James David Gray
Applicant
** v.**
** Kathleen Janet Grey**
Respondent
BEFORE: Conlan J.
COUNSEL: Carol A. Allen, for the Applicant
Erroll G. Treslan, for the Respondent
REASONS FOR JUDGMENT
Conlan J.
Released: August 26, 2013