Court File and Parties

COURT FILE NO.: 5820/11 (Simcoe)

DATE: 2013-10-10

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Marcy Jo Smith

Applicant

– and –

Richard Ronald Smith

Respondent

Counsel:

J. F. Bushell, for the Applicant

B.J. Culp, for the Respondent

HEARD: September 23, 24 & 30, 2013

REASONS FOR DECISION

THE HONOURABLE MR. JUSTICE D.J. GORDON

[1] In this spousal support case, the primary focus is the retirement of the Respondent.

Background

[2] Marcy Jo Smith and Richard Ronald Smith married on December 6, 1985. Separation occurred on August 13, 2010. Two children were born to their relationship: Ryan, on August 26, 1987, and Tyler, on October 6, 1989. Ms. Smith is 50 years of age. Mr. Smith is 54.

[3] Ms. Smith is employed as a school bus driver and at a flower shop. Both positions are part-time. Her 2012 income was $27,290. Similar, or slightly less, income is expected for 2013.

[4] Mr. Smith was employed at U.S. Steel, formerly Stelco, as a licensed electrician. His 2012 income was $92,095. Mr. Smith retired on April 25, 2013. Pension payments commence on November 1, 2013. As a result of the division of his pension with Ms. Smith, he will now receive $20,484 per annum. Mr. Smith does not intend on seeking other employment.

[5] On August 13, 2010, Ms. Smith left the matrimonial home and obtained other accommodation. Mr. Smith and the two adult children remained in the residence.

[6] Following separation, discussion between the parties resulted in a financial contribution from Mr. Smith to assist in meeting the living expenses of Ms. Smith. Payments to, or on behalf of, Ms. Smith totaled approximately $12,000.

Litigation

[7] This case commenced by Application, issued on October 25, 2010. Ms. Smith requested a divorce, spousal support, an equalization of net family properties and other relief.

[8] The Answer of Mr. Smith is dated June 6, 2012. He agreed to a division of assets but opposed the spousal support claim.

[9] Ms. Smith’s subsequent motion for temporary spousal support resulted in a consent order granted by Taylor J. on September 28, 2012. On a without prejudice basis, Mr. Smith has been paying $1,500 monthly to Ms. Smith since October 1, 2012. The parties agree the final payment under this temporary order will be delivered on October 1, 2013.

Property

[10] The property issues were ultimately resolved, such occurring after the presentation of evidence and before the submissions of counsel. In result, on September 30, 2013, I granted a consent order on the following terms:

(a) The Applicant shall receive the Family Law Value amount of $138,890.32 transferred from the Respondent’s Retirement Plan for USW Local 8782 members at Lake Erie Works, which shall be transferred to a locked-in retirement account (LIRA) or a Life Income Fund (LIF) to be selected by the Applicant;

(b) The Applicant shall transfer her interest in 886B Concession 14, Townsend Road, Simcoe, Ontario, also known as the “vacant lot” to the Respondent, with the Respondent to pay the costs of the transfer;

(c) The Applicant relinquishes any spousal interest she has in the matrimonial home at 886 Concession Road 14, Simcoe; and

(d) The Respondent shall make an equalization payment to the Applicant of $145,000 by means of an RRSP rollover of $125,000 and $20,000 cash payment.

[11] According to the Net Family Property Statements tendered in evidence, Ms. Smith had approximately $121,926 in her RRSP account on the date of separation. Some amount was later withdrawn for living expenses. Mr. Smith had about $180,811 in his RRSP accounts. Notional taxes would have been considered in the equalization calculation. The value of the matrimonial home and adjacent lot was $215,000. There were other assets.

Events Prior to Marriage

[12] Mr. Smith began his employment at Stelco in 1981, remaining with the company, later known as U.S. Steel, until retirement in 2013. He started contributing to his RRSP account in or about 1980.

[13] In 1982, Mr. Smith purchased his grandmother’s residence at a reduced price of $30,000. This became the matrimonial home in 1985.

[14] Ms. Smith had a Grade 12 education. She was employed at tobacco farms, essentially on a seasonal basis, as a labourer. Ms. Smith did not acquire any assets of significance prior to marriage.

Cohabitation

[15] In many respects, the parties had a traditional marriage. Mr. Smith’s employment was the primary source of income for the family. Ms. Smith continued working at tobacco farms until the birth of Ryan in 1987. She was out of the workforce for 10 years. Ms. Smith was the primary caregiver for Ryan and Tyler and performed the majority of domestic or household tasks. She earned some income in providing babysitting services for other families.

[16] In 1998, Ms. Smith obtained new employment. She acquired a Class “B” driver’s licence and was hired to drive a school bus on a part-time basis. Ms. Smith also worked at local fruit farms on a seasonal basis. In 2007, she replaced this farm work with a job at a flower shop. In 2010, Ms. Smith completed a program at Mohawk College and received a diploma in floral design.

[17] Throughout the marriage, Mr. Smith regularly contributed to his RRSP and made spousal deposits to Ms. Smith’s RRSP.

[18] The parties continued to reside at the same matrimonial home until 2010.

Separation

[19] Although the evidence was less than clear, it appears the marital relationship began to decline in the several years prior to separation. Mr. Smith was of the view that Ms. Smith began a relationship with Dwayne MacKenzie as early as 2006, having observed the two at their place of employment. Ms. Smith denied such occurring but acknowledged a brief relationship with Mr. MacKenzie following separation.

[20] In any event, Ms. Smith left the matrimonial home on August 13, 2010. The two children, then 23 and 21, still lived at home and were supported, in part, by Mr. Smith. Ryan was working at U.S. Steel. Tyler was said to be a dependant at the time. He would commence a program at Conestoga College in 2011. Mr. Smith would pay all household expenses for the matrimonial home following separation.

[21] Ryan continues to reside with Mr. Smith. Tyler lives in Waterloo. Both parties have contributed towards Tyler’s college expense.

[22] Following separation, the parties discussed the need of Ms. Smith for her living expenses. As a result, Mr. Smith paid to Ms. Smith, or on her behalf, $12,000 over the following year.

[23] In addition, since separation Ms. Smith has withdrawn $7,000 from her RRSP and borrowed $17,000 on a line of credit. The money was used for her living expenses and for Tyler’s college education. She did not acquire capital assets.

[24] Ms. Smith commenced this action when Mr. Smith declined to continue the payments. Such resumed with the consent order being granted in September 2012.

Retirement

[25] The contract between U.S. Steel and Mr. Smith’s union includes provisions for a pension plan. Retirement on a full pension can occur after 30 years service. Mr. Smith qualified for a full pension in 2011, but continued his employment for two more years.

[26] On April 25, 2013, Mr. Smith signed an Election to Retire and ceased working at U.S. Steel. The contract contained a provision for pre-retirement vacation pay, essentially salary continuation until October 31, 2013. On November 1, 2013, Mr. Smith will receive his first pension payment.

[27] Correspondence from the manager of pension services at U.S. Steel, dated September 17, 2013, indicates that Mr. Smith would have been entitled to a monthly pension of $1,885, plus a supplement of $900 until Canada Pension Plan payments commence at age 65. Given the reduction in his pension as a result of the transfer of the Family Law Value of $138,890.32 to Ms. Smith, Mr. Smith will now receive a monthly pension of $1,174.50, plus a supplement of $532.50.

[28] Ms. Smith’s entitlement to collect on her portion of this pension is said to commence at age 55.

[29] Mr. Smith’s position at U.S. Steel was in the coke oven area of the plant. The working environment was less than ideal, given the presence of chemicals in the air resulting from the industrial process. In result, employees were required to attend for annual medical examinations and for x-rays every two years. Mr. Smith reported that only one employee in this department remains from the original group. The others have retired or died prematurely.

[30] The parties had discussions during cohabitation as to the nature of Mr. Smith’s employment. He had developed a chronic cough. Mr. Smith also has ulcerative colitis. This condition led to hospitalization on three occasions in the past. Mr. Smith has been prescribed medication, aminisalicylic acid, for the colitis. He will require this medication indefinitely.

[31] Ms. Smith denies that the conversations pertained to Mr. Smith’s retirement. However, she acknowledged an ongoing concern for his work environment. In her words, she wanted him to “get out of there … the sooner the better”. Mr. Smith reported the plan discussed was for him to retire once he qualified for a full pension.

Post-Retirement

[32] Mr. Smith has not worked since April 25, 2013. He said there is no intention to return to U.S.Steel, obtain other employment or establish an electrical contracting business. In his words, “I am retired”.

[33] In cross-examination, Mr. Smith was referred to several current employment advertisements for electricians, one being from U.S. Steel. There are employment opportunities.

[34] In the past, Mr. Smith has done some electrical work for friends and neighbours. Ms. Smith referred to it as unreported cash income. Mr. Smith described the jobs as minor projects, performed on a barter system whereby, for example, he would have use of a friend’s garage to work on his vehicle. He acknowledged some cash payments that were used to benefit the family.

[35] During the latter part of cohabitation, Ms. Smith’s interest in floral design lead to employment and a college program in that field. There was some discussion between the parties in the past as to her opening a floral business with Mr. Smith assisting in some capacity. Some effort was made in this pursuit but the business plan was never implemented.

[36] Ms. Smith has continued with her two part-time positions, driving a school bus and at the flower shop. She enjoys her work and is content to continue both jobs.

[37] In cross-examination, Ms. Smith was also referred to recent employment advertisements, either in floral design or for driving a municipal bus. She has not pursued better employment opportunities. It appears such exist in her chosen fields.

[38] Ms. Smith does not have any health issues that might impact on her ability to work.

Issues

[39] The primary issues requiring determination pertain to Ms. Smith’s claim for:

(a) retroactive spousal support; and

(b) future spousal support.

[40] Secondary issues were raised by counsel regarding:

(a) the nature of support entitlement, compensatory and non-compensatory, and the impact of the property settlement;

(b) the timing of Mr. Smith’s retirement and any obligation to continue working;

(c) the ability of Ms. Smith to increase her income; and

(d) gross repudiation of the marriage.

Retroactive Spousal Support

[41] There is no dispute as to entitlement of Ms. Smith to a retroactive award of spousal support. The disagreement is the commencement date and the amount.

[42] On behalf of Ms. Smith, Mr. Bushell submits the spousal support obligation coincides with the separation date and, therefore, commences on September 1, 2010. Relying on the mid-point of the Spousal Support Advisory Guidelines (“SSAG”), he says monthly payments ought to have been:

(i) 2010 - $1,650

(ii) 2011 - $2,446

(iii) 2012 - $2,363

(iv) 2013 - $2,366

[43] Mr. Bushell calculates the total support payments required from September 1, 2010 to September 30, 2013 to be $85,227. Deducting $18,000 for spousal support paid pursuant to the temporary order and $12,000 voluntarily paid leaves a net amount owing of $55,227.

[44] Mr. Culp argues the commencement date for the retroactive claim should be the date of the application, October 25, 2011. In addition to the $12,000 paid to or on behalf of Ms. Smith, Mr. Culp says consideration ought to be given to Mr. Smith’s having to support the adult children after separation and the payment of joint credit card debt. He refers to the parties’ discussion as to financial assistance for Ms. Smith’s apartment rent, being the monthly amount of $600, and says Mr. Smith ought to pay retroactive support of $7,200 for the time period November 1, 2012 to September 30, 2012.

[45] The presumptive entitlement date is that when notice is given: see LeVan v. LeVan, [2006] O.J. No. 4599 (Ont. S.C.J.); affirmed 2008 ONCA 388.

[46] An earlier date may be considered, having regard to:

(a) the extent to which the Applicant established past need and the payor’s ability to pay;

(b) the underlying basis for the ongoing support obligation;

(c) the requirement that there be a reason for awarding retroactive support;

(d) the impact of a retroactive award on the payor and whether such will create an undue burden or effect a redistribution of capital;

(e) the presence of blameworthy conduct by the payor;

(f) notice of intention to seek support and negotiations to that end;

(g) delay in proceeding and an explanation for the delay; and

(h) the appropriateness of a retroactive order pre-dating the application.

See Bremer v. Bremer, [2005] O.J. No. 608 (Ont. C.A.); Marinangeli v. Marinangeli (2003), 38 R.F.L. (5th) 307 (Ont. C.A.); and S. (D.B.) v. G. (S.R.); W. (L.J.) v. R. (T.A.); Henry v. Henry; Heinstra v. Heimstra, 2006 SCC 37, [2006] S.C.J. No. 37 (S.C.C.).

[47] In this case, I conclude the commencement date for spousal support is the date of the Application for the following reasons:

(a) Ms. Smith did not plead an earlier date;

(b) following separation, Mr. Smith paid to Ms. Smith, or on her behalf, $12,000;

(c) the Application was issued when Ms. Smith determined further assistance would not be provided voluntarily;

(d) encroachment on capital or incurring debt by Ms. Smith was, in part, to assist Tyler;

(e) a retroactive award will come out of the capital of Mr. Smith;

(f) there is no blameworthy conduct; and

(g) the delay in issuing the Application resulted from the prior agreement for voluntary assistance.

[48] The Application was issued October 25, 2011. In result, retroactive spousal support may be considered from November 1, 2011 to October 31, 2013.

[49] Mr. Smith has paid monthly spousal support of $1,500 since October 1, 2012, pursuant to the temporary order. It is agreed the final payment on this order was to be delivered on October 1, 2013.

[50] A temporary order is not binding on the discretion of a trial judge. The purpose of a temporary order is to allow the parties to proceed to trial on a reasonable footing. This temporary order, granted on consent, was on a without prejudice basis. Accordingly, I decline to simply rely on the temporary order.

[51] Rather, the focus must be on the financial circumstances of the parties in the relevant time period. In this regard, while the SSAG are a useful tool, a strict application is not appropriate on a retroactive award. Such would clearly result in a redistribution of capital.

[52] Having regard to Ms. Smith’s financial statement, sworn January 30, 2013, and essentially confirmed by her affidavit, sworn September 21, 2013, her monthly shortfall was approximately $1,100. Payments received since the temporary order, net of income tax, covered the shortfall in the past year.

[53] There is no issue as to need or ability to pay. In the year prior to the temporary order, Ms. Smith’s shortfall was paid from withdrawals from her RRSP and borrowing on a line of credit.

[54] Accordingly, I find a reasonable retroactive award in the circumstances is $15,000, payable forthwith as a lump sum, the amount being neither income nor deductible for income tax purposes.

Future Spousal Support

[55] As before, there is a significant difference in the positions of the parties.

[56] Mr. Bushell submits income should be imputed to Mr. Smith of $59,300 and, when added to his pension income of $20,700, the total for support purposes ought be $80,000. With Ms. Smith’s income at $27,295, the mid-point of the SSAG is $1,992 monthly. Ms. Smith seeks this amount, commencing November 1, 2013.

[57] Mr. Culp argues for no spousal support payable given Mr. Smith’s retirement and the property settlement. He also says Ms. Smith can better her income and, as well, raises the issue of gross repudiation of the marriage.

[58] Although counsel fully canvassed the secondary issues, in my view, Mr. Smith’s retirement is the focus with respect to the issue of future spousal support.

[59] When there is a support obligation, retirement must be reasonable and for a valid reason: see Shepley v. Shepley (Ont. S.C.J.).

[60] Generally speaking, unemployment or underemployment cannot be deliberately created to avoid a support obligation: see, for example, Dishman v. Dishman, 2010 ONSC 5239; and Muirhead v. Muirhead (1995), 14 R.F.L. (4th) 276 (B.C.C.A.).

[61] As counsel recognized, there is a difference between an application in the first instance and a motion to change when considering retirement. The latter involves an existing court order and, hence, much of the caselaw examines early retirement to defeat support obligations.

[62] Retirement engages a discussion on the ability to pay. Further, once a pension is equalized, as a general rule, the pension, once in pay, should only be available in exceptional circumstances so as to avoid “double dipping”: see Boston v. Boston, [2001] S.C.R. 43.

[63] Was Mr. Smith’s decision to retire reasonable and for a valid reason? I conclude it was.

[64] Mr. Smith was entitled to retire in 2011 on a full pension, having met the criteria of 30 years service. He chose to continue working a further two years.

[65] In these circumstances, I am of the view this is not a case of “early retirement”. That concept applies to premature retirement on a reduced pension for the purpose of defeating a legitimate support claim. Entitlement to a full pension differs.

[66] It is only fair to observe that 65 is no longer the presumptive retirement date. Nor is 62.5, the suggested age according to Mr. Bushell having regard to SSAG. Rather many, if not most, retirement plans now use retirement dates based on an 80 factor (age plus years of employment) or, as here, years of service.

[67] Mr. Smith’s decision to retire was reasonable and for a valid reason, having met the pension plan criteria and taking into account the conditions of his employment and the prior discussions of the parties. Further, the retirement was a foreseeable event and could not be said by Ms. Smith to be unexpected.

[68] Retirement occurred after separation, while a temporary order for support was in place and at a time when the parties were expecting to be called to trial. I do not see these as being relevant factors. Mr. Smith delivered all support payments required by the temporary order. As well, retirement was anticipated, whether cohabitation continued or not.

[69] The real issue is whether Mr. Smith has an obligation to supplement his pension income so that he can pay spousal support.

[70] Mr. Smith says he does not intend to work in the future. Quite frankly, I expect he will seek some remuneration, whether by employment or odd jobs, given that his current expenses exceed his pension income.

[71] Nevertheless, I am not persuaded Mr. Smith has a legal obligation to obtain additional income so as to provide spousal support for Ms. Smith.

[72] The discussions during cohabitation are important. As previously said, retirement was foreseeable. The only future plan considered by the parties was a potential business opportunity for Ms. Smith. Had such been implemented, Mr. Smith would have assisted in the business but it would not have resulted in significant, if any, income.

[73] This is not a child support case. Child support does not end until the child becomes independent. A parent is thus obliged to continue working so as to provide support for the child.

[74] Similarly, an existing final order, as opposed to a temporary order, establishes support liability and may necessitate continued obligations.

[75] In the circumstances of this case, I see no obligation for Mr. Smith to supplement his income. Given his pension income, Mr. Smith no longer has the means or ability to pay spousal support.

[76] In response to my inquiry as to the possibility of Mr. Smith changing his mind regarding future employment, Mr. Culp appropriately suggested the order require Mr. Smith to make annual income disclosure and permit a future review.

[77] Accordingly, the spousal support obligation of Mr. Smith to Ms. Smith ends with the final payment under the temporary order on October 1, 2013. Ms. Smith’s claim for spousal support is dismissed.

Secondary Issues

[78] In the event my decision on spousal support is determined to be incorrect, I propose to briefly consider the other issues raised by counsel.

(i) Compensatory Support

[79] The factors and objectives of spousal support in section 15.2(4) and (6), Divorce Act, and the purposes of spousal support in section 33(8), Family Law Act, necessitate consideration of compensatory support.

[80] Compensatory support is to relieve the economic hardship resulting from marriage or its breakdown. The compensatory nature often reflects foregoing career opportunities or other sacrifices made due to spousal functions, such as raising children. See Moge v. Moge, [1992] 3 S.C.R. 13; Bracklow v. Bracklow, [1999] 1 S.C.R. 420; and Roseneck v. Gowling (2002), 62 O.R. (3d) 789 (Ont. C.A.).

[81] A fair distribution of the economic consequences of marriage breakdown, having regard to the division of property, may negate a compensatory support claim in appropriate circumstances: see Moge and Roseneck, supra.

[82] Given the nature of the parties’ relationship, there is a potential compensatory support claim. In this regard, Ms. Smith left the workforce after the birth of the first child. Her primary role then involved childcare and domestic duties. Later employment improved her financial circumstances, having acquired better job skills. Being out of the workforce for 10 years, this financial improvement was delayed. In other circumstances, it is likely a career would have been chosen much earlier. The analysis in the caselaw regarding “traditional marriage” applies.

[83] However, the property division impacts on this issue. During cohabitation, Mr. Smith made deposits to Ms. Smith’s RRSP. His pension plan has now been divided with her and he is in the process of making the equalization RRSP transfer and cash payment.

[84] It is of some relevance that part of the equalization payment reflects the full value of the matrimonial home, an asset acquired by Mr. Smith before marriage. However, the matrimonial home has special status under the Family Law Act. Ms. Smith simply received that to which she was entitled.

[85] Given the property division, I do not see compensatory support as a significant issue. The focus would be non-compensatory support.

(ii) Ms. Smith’s Employment

[86] Ms. Smith has two part-time jobs. She enjoys the work. It cannot be said she has been unreasonable in her employment endeavours.

[87] On the other hand, I am satisfied there are other employment opportunities she is qualified to pursue. She has not made any application for such positions. In result it is unknown if she would be hired, particularly at her age.

[88] On the evidence presented, I would not impute a higher income to Ms. Smith.

(iii) Gross Repudiation of the Marriage

[89] Conduct may be considered in determining the amount of spousal support, as provided in section 33(10), Family Law Act. Spousal misconduct shall not be considered under section 15.2(5), Divorce Act, although the consequences arising from it may: see Leskun v. Leskun, 2006 SCC 25, [2006] S.C.J. 25.

[90] As is the usual practice, Ms. Smith has claimed spousal support in her application under both statutes.

[91] The test under section 33(10) involves:

(a) the conduct must be exceptionally bad;

(b) the conduct must be such as could reasonably be expected to destroy the marriage;

(c) the conduct must have persisted in the face of innocence and virtual blamelessness on the part of the other spouse;

(d) the commission of a matrimonial offence is not sufficient by any means;

(e) the party raising the issue of relevant conduct should be prepared to undertake that there is a bona fide belief that the test can be satisfied while acknowledging the risks of punitive costs if the court finds on the whole that the issue is frivolous; and

(f) the pleadings or subsequent written particulars should set out a summary of the conduct relied on to meet the test so that the court can make a preliminary ruling based on the likelihood of the test being met.

See B. (S.) v. B. (L.) (1999), 2 R.F.L. (5th) 32 (Ont. S.C.J.); and Smith v. Smith, [2002] O.J. No. 2254 (Ont. S.C.J.).

[92] Mr. Smith is of the view that Ms. Smith became involved with Mr. MacKenzie, at least by 2006. Mr. MacKenzie was a friend of both parties and a godfather to one of their children. Mr. Smith observed them on several occasions at Ms. Smith’s place of employment. While suspicious events, the evidence was not conclusive. The relationship with Mr. MacKenzie was clearly established at separation. It continued for several months.

[93] Gross repudiation was not pleaded. It should have so that the opposing party has notice.

[94] More importantly, the paramountcy of federal legislation applies. Spousal misconduct, on its face, may not be considered. The consequences, if any, may; however, I am not persuaded any such consequences are relevant in this case.

[95] There is an evidentiary shortfall. While the relationship may have been a factor, it was not, in my view out of the ordinary as compared to other cases. This is not an extreme case. I also suspect there were other factors leading to the separation.

[96] Accordingly, gross repudiation of the marriage was not established.

Summary

[97] At the completion of the trial, on September 30, 2013, I granted a final order for:

(a) a divorce; and

(b) resolution of the property issues in terms of the consent filed.

[98] For the foregoing reasons, a further final order shall issue on the following terms:

(a) the Respondent shall forthwith pay to the Applicant a lump sum retroactive spousal support award of $15,000, said amount being neither income nor deductible for income tax purposes;

(b) the Applicant’s spousal support claim is otherwise dismissed;

(c) the Respondent shall provide annual income disclosure to the Applicant by way of delivering a copy of his income tax return and notice of assessment, commencing June 1, 2014; and

(d) the spousal support issue shall be reviewable in the event of a material change in circumstances.

[99] The temporary order, granted September 28, 2012, automatically terminates with the release of this decision.

[100] A support deduction order shall issue, if required.

[101] If the parties are unable to resolve the issue of costs, counsel shall deliver brief written submissions to my chambers in Cayuga within 30 days.

D.J. Gordon J.

Released: October 10, 2013