Orlando (formerly Jepsen) v. Jepsen, 2013 ONSC 6033

CITATION: Orlando (formerly Jepsen) v. Jepsen, 2013 ONSC 6033

COURT FILE NO.: 21/08

DATE: 2013/09/26

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jennifer Lynn Orlando (formerly Jepsen) Applicant

AND:

Preben Christian Jepsen, Respondent

BEFORE: The Honourable Mr. Justice D. J. Taliano

COUNSEL: Patricia Lucas, Counsel for the Applicant

Jerry J. Chaimovitz, Counsel for the Respondent

HEARD: August 15, 16 & 17, 2013

ENDORSEMENT

[1] Both the applicant and the respondent have launched motions to change the final order of Mazza J. dated May 8, 2009.

[2] The applicant/mother seeks to;

a. recover expenses for day care and children activities,

b. change her driving obligations for access visits,

c. clarify life insurance provisions, and

d. up-date child support obligations.

[3] The respondent/father seeks a change in his spousal support obligation.

[4] During the course of the trial, the parties reached agreement on the life insurance claims and have agreed to draft and file a consent. An order will issue as part of these reasons to formalize their agreement. In addition, they have settled the child support issue and the court has already made an endorsement that reflects their agreement which will also be incorporated into the order that ultimately issues from these reasons.

BACKGROUND

[5] The parties commenced living together in a common law relationship in 1995 and married on October 3, 1998. They had two children, namely, Madyson Dawn Jepsen born August 14, 2000 and Nathan Christian Jepsen born March 25, 2003. They separated in November, 2007.

[6] Although the mother worked outside of the home during the earlier stages of the relationship, once their first child was conceived, it was agreed that the mother would leave her employment, where she was grossing approximately $25,000 per annum[^1], to look after the off-spring of their marriage. By the time of the separation, she was not working outside of the home and had been out of the work force for approximately seven years. Following the separation, legal proceedings were instituted pursuant to which the father paid both child support ($1,435) and spousal support ($2,000) per month based on his 2007 income of $102,538 per annum, pursuant to a consent dated May 6, 2008.[^2]

[7] Following lengthy negotiations thereafter, the parties entered into Minutes of Settlement dated April 28, 2009, which ultimately led to the final consent order of Mazza J. This order resolved all issues at that time.

[8] The issues referred to in paragraphs 2 and 3 above were dealt with during the course of a three day trial following which judgment was reserved.

SPOUSAL SUPPORT

[9] Paragraph 36 of the order of Mazza J. fixed spousal support in the sum of $1,800 per month commencing July 1, 2009. Paragraph 37 provided that “the quantum and entitlement to spousal support may be “reviewed” three years after the date of the final order” and further provided that employment income of $10,000 or less earned by the mother was “deemed not to be a material change in circumstances”.

[10] Paragraph 38 of the order recited that the mother was unemployed at the time “but intends to seek retraining, which it is anticipated will take 2 years to complete”. The purpose of the review “will be to determine (a) if the mother has pursued her obligation to seek out retraining and employment in good faith, (b) whether the mother has been successful in obtaining employment, (c) the realistic quantum of income which should be attributed to the mother as a result of her retraining and the employment opportunities, and (d) to allow the mother to obtain part time employment with a nominal income in order to finance her retraining and education without affecting the quantum of spousal support”.

[11] The quantum of spousal support ($1,800) and child support ($1,343) totalling $3,143 per month in support payments, was based on the father’s 2008 income of $93,579.11.

[12] Child support was changed on January 18, 2013 by order of Ramsay J. to $1,569 per month effective July 1, 2012. The change was based on the father’s income for 2011 of $112,528 which included an unusual amount of overtime.

[13] The parties agreed during the course of the trial to change child support to $1,367 per month commencing July 1, 2013. An endorsement has already been made to this effect.

[14] Counsel for the father is not seeking to change his client’s spousal support obligation for the years 2009 and 2010[^3]. However, for 2011, 2012 and ongoing, it is submitted that the mother’s yearly income constitutes a material change of circumstance, the effect of which suggests that the father has overpaid spousal support by a significant amount. The father’s motion is brought pursuant to paragraph 35 of the order which permits a variation in both spousal and child support “if there is a material change in circumstances”.

[15] The mother earned employment income of $19,242 in 2011. The mid range of the Spousal Support Advisory Guidelines (SSAG), filed by counsel, indicates a spousal support obligation in the sum of $1,412 per month based on the father’s earnings (including exceptional overtime) of $112,528. If the father’s spousal support obligation is fixed in this amount for 2011, the father has overpaid spousal support in 2011 each month by $388 or $4,656 for the year.

[16] The mother earned employment income of $24,629 in 2012. The father’s income was $95,990 and his spousal support obligation according to SSAG, should have been $763 per month. If the father’s spousal support obligation for 2012 is changed to $763 per month, he has overpaid spousal support by $1,037 per month or $12,444.44 for the year.

[17] The father has paid spousal support of $1,800 per month to date in 2013. His income is not significantly different in 2013 from his income in 2012 and therefore if his spousal support obligation for 2013 to date is changed to $763 per month, the father has overpaid support in 2013 by $8,296 for the 8 months to August 31.

[18] I am satisfied that the termination of spousal support upon the mother becoming self- supporting was contemplated by the parties and was expected to occur within two or three years from the date of Mazza J.’s order, unless circumstances evident upon a review justified ongoing support. Their agreement and the wording of Mazza J.’s order is consistent with section 30 of the Family Law Act. The mother is now self-supporting in that her employment income (for only 30 hours per week) not only meets her needs but exceeds the spousal support that had been agreed upon. Therefore further support would not appear to be warranted, particularly given the fact that the mother has the potential to work longer hours when seniority at her work-place so permits.

[19] Ms. Lucas, counsel for the mother, only concedes that spousal support should be reduced and submits that an appropriate figure is $1,000 per month. She also submits that support should be paid until the youngest child graduates from high school.

[20] Counsel’s submission is clearly inconsistent with the terms of the order of Mazza J. which both parties consented to. In addition, no basis for her submission for prolonged support was offered although a passing reference was made to compensatory support.

[21] However, compensatory spousal support is based on economic disadvantage from the marriage or the conferral of an economic advantage on the other spouse. The evidence in this case suggests neither and in fact the mother has reintegrated herself into the work-force without difficulty following a transitional period at the same or perhaps even an improved level than she was at when she left it. Accordingly, there is no basis for an award of compensatory support.

[22] I am satisfied that the overpayment of support that I have previously detailed, has placed the father in a precarious financial position that required him to seek an advance on his inheritance of approximately $88,000 and forced him to borrow from family to meet his obligations. A review of Exhibit 34 indicates the father’s net pay after support payments in 2012 amounted to approximately $20,000 when his income for that year was $95,000. The father is clearly entitled to relief that will restore some measure of balance to his spousal support obligation.

[23] The total overpayment of spousal support is $25,398. At the conclusion of the trial and following submissions, I suspended all further spousal support obligations until further order of the court. Although the review referred to in the Mazza J. order was to occur after May 2012, paragraph 35 of the order permits the order to be changed if there is a material change of circumstances. Clearly, the earnings of the mother in 2011, 2012 and 2013 from steady and secure employment in the amounts previously indicated, represent a material change from her income at the time of separation which was zero. It was precisely the change in circumstances that was anticipated by the parties when they entered into the Minutes of Settlement which led to Mazza J.’s order. This material change in the wife’s income warrants a corresponding change of the father’s spousal support obligations.

[24] The question is: how did these overpayments come to pass and how should the overpayment be dealt with? The father alleges that the mother refused to disclose her income to him and never provided particulars of any change in her income. Paragraph 23 of Mazza J.’s order, (as amended by the order of MacPherson J. on March 4, 2011) required the parties to exchange income tax returns and notices of assessment “within 14 days of receipt”. Paragraph 24 of the Mazza J. order also required the parties to provide the other with a written notice of any change in his or her employment status or income within 30 days of the date of that change.

[25] The mother was clearly in breach of these disclosure obligations and has benefited from her behaviour at the father’s expense. She not only did not inform the father of her change in income in 2011, as required by the order, but her change of information form sworn on October 24, 2011 found at Tab 2 of the Trial Record, indicated that her 2011 income was $34,500 when it was actually $40,842, including spousal support. Notwithstanding the mandatory reporting provisions in the order, the mother was ordered by MacPherson J. on June 5, 2012 (nine months after she launched her motion to change) to provide details of her employment income.

[26] Similarly, during the course of the trial, the mother was not forthcoming to the point of being deliberately vague about the availability of expanded work hours and to what extent her income will increase if and when she works full time.

[27] Bearing in mind the length of the marriage, the earning potential of the mother prior to and during the marriage, the terms of the agreement, the needs of the mother, the stability of her position with the school board, and the ability of the mother to earn even greater income by seeking full time status with the board, spousal support should be terminated. The termination should be effective August 31, 2013 by which time self-sufficiency was established as contemplated by the terms of Mazza J.’s order and the agreement between the parties.

[28] It should also be noted that the mother appears in good health and she has a relationship with another person with whom she lives at least part of the time. I have also taken into account the fact that the marriage was a nine year relationship preceded by a common law relationship of approximately three years. The mother has been supported by the father for almost 6 years post separation. DivorceMate suggests a minimum duration of 5.5 years for spousal support in the circumstances.

[29] However, the overpayment of spousal support by the father creates a quandary for the court. To fix the appropriate level of spousal support for 2011, 2012 and 2013, creates a debt from the mother to the father which is substantial. It is clear that the creation of this debt was caused by the mother’s own failure to report her change in earnings to the father in a timely way. The excessive support has enabled the mother to accumulate significant savings and has enabled her to have a comfortable life style while the father has struggled financially throughout that same period. The mother was aware of the father’s financial problems, yet she accepted and retained monies from the father which she knew she was not entitled to receive. Her subsequent resistance to a termination of spousal support and her attempt to prolong spousal support demonstrate an overly aggressive approach to support that is inappropriate. These are factors which suggest that the mother should be required to repay the debt.

[30] In addition, it creates a dangerous precedent to permit the mother to retain monies that she was able to accumulate by breaching the disclosure requirements imposed by a consent order negotiated and drafted by her own counsel (not her present counsel). Not making a restitution order is tantamount to condoning and encouraging unacceptable conduct among family law litigants.

[31] On the other hand, the mother is a primary care parent of two children with employment income which is considerably less than that of the father. It is therefore troubling to require her to return monies that have already been spent, particularly the portions of her income that were invested in the children’s activities.

[32] Never-the-less, I have concluded that the appropriate decision is to fix the father’s support payments as indicated above thereby creating the gross overpayment of $24,629, subject to findings on child care and activity expenses which I will deal with momentarily. I leave it to the parties to determine how the net debt is to be repaid. I remind them that the Ontario Court of Appeal has held in Richardson v. Richardson, 1985 CanLII 5143 (ON CA), [1985] 1 R.F.L. (3d) 67 that the debt cannot be offset by child support payments. Should the parties be unable to agree on the method of repayment, I will hear submissions on this issue either in writing or by oral submissions once counsel notify the trial co-ordinator of their time requirements and preferences. I would urge the parties to consider a combination of a lump sum payment followed by monthly instalments until the debt is paid. Should I not hear from the parties on this issue within 30 days, the court will assume that the matter has been resolved directly by the parties.

EXTRAORDINRY EXPENSES

[33] With respect to section 7 expenses, the mother filed a summary of her claims which may be found in her Document Brief, Exhibit 1. She seeks to recover child care costs set out at Tab E which total $2,813.40 and activity expenses of the children summarized at Tab F which total $6,924.02.

Child Care Expenses

[34] Child care expenses are covered by paragraph 21 of the order and are to be shared by the parents in proportion to their incomes. The child care expenses claimed are supported by invoices and have been apportioned by the mother’s spread sheet. Although the father questioned some of the charges that were incurred prior to January 2012 when she started full time employment, I accept the mother’s evidence that these child care costs were incurred to permit her to work for her present employer on an “on call basis” prior to and after obtaining more full time employment.

[35] The father also argued that the mother received tax benefits which reduced her gross costs. Counsel for the mother estimated that at her marginal tax rate, the actual benefit to her would be modest and did calculations indicating a tax savings to the mother of $438.

[36] There is no evidence before the court on the matter. I am generally satisfied that the amount would approximate the amount conceded by Ms. Lucas and I am prepared to allow the husband an adjustment of $438 for this item. Accordingly, I allow the mother’s claim for child care expenses in the sum of $2,375.40 which amount shall be deducted from monies found owing herein to the father.

[37] Although Lafreniere J. dealt with these day care costs by motion on October 4, 2012, the parties agree that her order should be rescinded and it is so ordered.

Activity Expenses

[38] With respect to expenses incurred by the mother for children’s activities, the mother has summarized them at Tab F of Exhibit 1, with attached receipts. There are several issues however. Paragraph 18 of the order requires the mother to provide the father with schedules of the proposed activities. Provided the father consents (which consent will not be unreasonably withheld), the father is to provide his proportionate share of the cost. The clause further provides that “the applicant shall provide her required contribution and complete the registration”. The clause also states that the parties agree that “an expense in excess of $500 per annum per activity shall be deemed to be an extraordinary expense as defined by s. 7 of the Guidelines”.

[39] The mother testified that she sent details of the activities to the father over the course of four years, at the end of the activity’s season when the costs were finally determined, although this was not the correct procedure. However, she states that the father neglected to respond to the bills she was sending him. She takes the position that at no time did he indicate that he was not consenting to the activities and therefore his consent should be inferred from his silence. Similarly, several of the activities were those enjoyed by the children prior to the separation and which are authorized by the order.

[40] The father takes the position that he was paying very generous child and spousal support and that the cost of the activities should have been covered by his basic monthly payments. In addition, at no time did he give his formal consent to the activities because he could not afford them. Further he states that he did not receive much of the material that the mother presented to the court and of the bills he did receive, he assumed that the cost of the activity described was under $500 and therefore the mother’s responsibility. In any event, he submits that the mother should have known that he was not consenting to the activity because he never paid any of the expenses over the four year period covered by her claim and that his non-payment should have signalled his lack of consent. Further, he submits that his responsibility was only to pay his proportionate share of s. 7 expenses calculated on the amount that exceeded $500. Finally, the father alleges that the mother breached the order by not waiting to register the children in their activities until he had forwarded his share of the cost, as the order provides and she should not be able to benefit by its breach.

[41] Regarding the children’s activities, I find in favour of the father. The procedure set out in the agreement was not followed. Had it been followed, the issue of consent would not have arisen. In addition, I accept the father’s evidence that he was in serious financial difficulty with respect to the terms of the agreement and he could ill-afford the extraordinary expenses that the wife was incurring and would not have consented had the proper procedure been followed. I also accept his evidence that his consent was never given for these activities and it cannot be inferred in the above noted circumstances. Quite the opposite, the mother should have known that the father was not consenting when he failed to respond or to pay for the activities, particularly over a span of four years. In addition, I accept the father’s evidence that he did not see the spread sheets that the mother presented at trial until just before trial nor did he receive many of the receipts for the children’s activities presented by the mother at trial.

[42] With respect to those activities allegedly covered by the phrase in the order that permitted the wife to substitute activities of comparable cost that were “presently being enjoyed” by the children, it should be noted that the order is dated May 9, 2009. All of the activity expenses listed in Schedule B of Tab 7 of the Applicant’s Document Brief postdate May 9, 2009 and therefore are not covered by this clause.

[43] Finally, I find the evidence of the mother on the subject of the children’s activity expenses somewhat odd in that the organizational detail she offered to the court was too perfect and not likely to have been presented to the father in the same form as she claims it was. The mother’s evidence is simply too suspect to override the clear and express procedural requirements of Mazza J.’s order. Accordingly, the claim for activity expenses is denied.

[44] That being the case, I fix the net amount of the father’s overpayment in the sum of $22,253.60 (the overpayment of $24,629 less child care of $2,375.40).

Driving for Access Visits

[45] The mother’s claim to change her responsibility for driving is not specifically pleaded however I will deal with the matter on the merits, since no objection was raised at trial. I see no merit in the mother’s complaint that she should not have to drive the extra distance involved arising from the father’s move from Smithville to Hamilton. There was no clause in the order prohibiting the parties from moving and both of them have moved from their original homes. The mother now lives in St. Catharines, the father in Hamilton.

[46] The order required the parties to share the driving required to accommodate the father’s access. The agreement meticulously provides for shared driving except in inclement weather when the father would assume the obligation for that occasion. However, the increased driving time is not onerous. It is simply a matter of an extra 10 to 20 minutes per trip. The Queen Elizabeth Highway, which is the route that would be used to get to and from Hamilton is much better than the country roads to Smithville. In any event, the parties have made their agreement and must abide by its terms in the absence of a material change in circumstance which might warrant a change in the order. There are no such circumstances here other than the two moves, which are off-setting inconveniences to each party.

[47] Accordingly, the driving for access visits will continue to be shared by the parties, either by finding a point equidistant that is mutually acceptable or by alternating delivery and pick up of the children on each access occasion, other than the Monday night access which is only for a matter of a few hours. Transportation between the two parental communities on Mondays after school is not practical, and accordingly the Monday transportation should be shared but confined to the City of St. Catharines, unless the Monday access is on a school holiday in which case the normal house-to-house transportation shall be equally shared.

[48] If the parties cannot agree on costs, the mother may make written submissions as to costs within 15 days of the release of these reasons. The father will have 15 days after receipt of the mother’s submissions to respond. All such written submissions are to be forwarded to me, at my chambers at the Court House, 59 Church Street, St. Catharines, L2R 7N8. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.

Taliano J.

Date: September 26, 2013

[^1]: See the mother’s application dated January 10, 2008 [^2]: See Tab 8 of the mother’s Application Record [^3]: The mother’s employment income in 2010 was $13,000 which is $3,000 in excess of the exemption of $10,000 permitted by paragraph 37 of the order and which would seemingly have warranted a reduction in the husband’s spousal support obligation.