ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 6515/13
DATE: 2014-03-07

B E T W E E N:

Laura Elizabeth Colquhoun-Kelly

Douglas R. Thomas, for the Applicant

Applicant

• and -

Gregory Patrick Kelly

Timothy Pedwell, for the Respondent

Respondent

HEARD at Welland, Ontario:
February 24, 25, 26 & 27, 2014

THE HONOURABLE JUSTICE J. R. HENDERSON

REASONS FOR JUDGMENT

INTRODUCTION

1The applicant (hereinafter called “the wife”) and the respondent (hereinafter called “the husband”) were married on May 11, 1999. They decided to separate from one another in early April 2011, but remained living under the same roof until the husband left the matrimonial home in mid-October 2011.

2The parties have two children, Kathleen Alyse Kelly, born May 17, 1999, and Alanah Marie Kelly, born June 9, 2000. After the husband left the matrimonial home the children spent alternate weeks with each of their parents until early July 2013. Since July 2013 the children, at their request, have resided with their father, and their mother has had some access in accordance with the children’s wishes.

3During the marriage, the wife had very little employment outside of the home. At approximately the time of the separation she obtained some employment at a call centre, followed by a contract job delivering car parts. Then, in March 2013 she started her current employment as a night clerk at a motel. In 2013 her income from employment was $22,137; in 2012 it was $12,744; and in 2011 it was $7,311.

4The husband has had a long time steady job as a crane operator. Currently he works fulltime at Modern Crane. His 2013 income was $95,235, from which there should be a deduction of about $3,000 for union dues. Therefore, the husband’s income for support purposes for 2013 was $92,235; for 2012 it was $88,477; and for 2011 it was $88,592.

5The wife continues to reside in the matrimonial home at 29 Stewart Avenue, Thorold, Ontario, but the parties have now agreed that the matrimonial home must be sold so that the parties can pay down some of their joint debts.

6From the month of November 2011 the husband paid both spousal support and child support to the wife. Spousal support was paid in the total amount of $920 per month, but instead of directly paying spousal support to the wife, the husband made weekly payments on the mortgage on the matrimonial home to President’s Choice Financial. Those mortgage payments were in the amount of $200 per week from November 2011 to January 2013, and $190 per week from February 2013 to date. At the end of each month if the total mortgage payments had been less than $920 in that month, the husband paid the difference to the wife as the balance of her spousal support. This practice has continued to date.

7Regarding child support, the husband has paid child support to the wife in the amount of $960 per month from November 2011 to July 2013, at which time child support was stopped by the husband as the children commenced residing with him on a fulltime basis. The wife has not paid any child support to the husband.

8The parties have resolved some of their matrimonial issues as set out in the Partial Minutes of Settlement (“PMS”) filed in this trial as Exhibit 1. Orders will go in accordance with the resolved matters set out in the PMS. The unresolved issues, the subject of this trial, included several property issues, arrears of child support, arrears of spousal support, and ongoing spousal support.

CUSTODY AND ACCESS

9The parties have resolved all issues of custody and access. It is agreed that the children will continue to reside with the husband. Orders will go in accordance with paragraphs 1 to 7 of the PMS.

PROPERTY ISSUES

10In the PMS the parties have resolved many of the property issues. They have agreed that the matrimonial home will be sold; that the net proceeds of the sale will be used to pay off the mortgage and the joint line of credit; that the contents of the matrimonial home will be divided equally; that any dispute as to the division of the contents will be resolved by a reference; and that they will each retain ownership and possession of their respective vehicles and personal property. Accordingly, an order will go in accordance with paragraph 15(a) to (e) of the PMS.

11The parties have also agreed that there will be an equalization of the husband’s pension by way of a transfer of an interest in that pension to the wife in accordance with the Pension Benefits Act, R.S.O. 1990, c. P.8, as amended. Accordingly, there will be an order in accordance with paragraph 16 of the PMS.

12There is an unresolved property issue regarding the 2008 Jayco trailer. I find that this trailer was purchased in the husband’s name in 2008 for approximately $23,000 and that the full amount of the purchase price was financed by a loan from RBC to the husband.

13Prior to the separation the trailer was on a rental lot at Windmill Point Park. In the spring of 2012 the husband moved the trailer to a secure compound at Windmill Point Park. Through the managers at the park, the husband has been attempting to sell the trailer, but has not been able to do so.

14In 2013 the husband’s mother paid off the RBC trailer loan in full, and thus the RBC loan has been converted to an interest free loan from the husband’s mother in the amount of $22,115.

15In his NFP statement the husband shows the parties as joint owners of the trailer, and joint debtors on the loan from his mother. He requests that the debt to his mother be paid out of the proceeds of the sale of the matrimonial home.

16In my view, there is no basis for the position taken by the husband with respect to the trailer and the trailer loan. The trailer is an asset owned by the husband, and the loan is a debt owed by the husband. The wife has no interest in the trailer and is not responsible for the loan. Therefore, both the trailer and the trailer loan will be shown on the husband’s side of the ledger in his NFP statement.

17For the purposes of the equalization payment, I find that the value of the trailer, as estimated by the husband, as at the date of separation is $19,986, and the amount of the debt to the husband’s mother is $22,115.

18The next property issue relates to the jewelry of the parties and the electronics that the husband alleges are in the wife’s possession. In my view these items should be considered as contents of the matrimonial home. Therefore, these items will be included in the above-mentioned order for an equal division of the contents of the matrimonial home, and a reference if necessary.

19The next property issue relates to the wife’s request for a credit on the sale of the matrimonial home because her spousal support was paid directly to the mortgagee, resulting in a significant reduction in the principal of the mortgage. The wife submits that the husband should not receive any benefit as a result of this reduction of the mortgage.

20To be specific, when the husband left the matrimonial home in October 2011, the principal owing on the mortgage was $48,913. For the next 28 months the husband paid spousal support to the wife, but did so primarily by making mortgage payments directly to President’s Choice Financial. Consequently, as of early 2014 the principal owing on the mortgage had been reduced to $30,328. Therefore, since the husband left the matrimonial home the mortgage has been reduced by about $18,000.

21When the matrimonial home is sold, and the net proceeds split, the husband stands to recoup about $9,000 of the spousal support payments he made by reason of the reduction in the principal of the mortgage. The wife therefore requests a credit in her favour upon the sale of the matrimonial home.

22In my view, the position taken by the wife is incorrect at law. I was provided with no case law that is directly on point, but the appropriate way of dealing with this situation directly flows from the provisions of the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”), and the Divorce Act, R.S.C. 1985, C.3.

23In this case, the wife is entitled to a periodic payment for spousal support in accordance with the Divorce Act. The quantum of spousal support is to be ascertained in consideration of a variety of factors, including the needs of the wife. Those needs will include the wife’s ongoing living expenses.

24If the wife chooses to remain in the matrimonial home, the wife’s living expenses will include all of the expenses associated with the matrimonial home including the payment of the mortgage, taxes, insurance, and utilities. That is, if the wife has possession of the entire matrimonial home, then the wife will be prima facie responsible for all of the expenses associated with the home. Even though the husband paid the mortgage directly to the mortgagee, I find that, in effect, the husband paid spousal support to the wife in the amount of $920 per month, and the wife used that amount to pay her living expenses.

25Also, the wife was not compelled to remain in the matrimonial home, nor was she compelled to permit the husband to pay her spousal support directly to the mortgagee. If either party had been unhappy with the arrangements, either party could have applied pursuant to the provisions of the FLA for a sale of the matrimonial home at any time. Neither party made such an application.

26I note that if the wife had chosen to leave the matrimonial home, the wife still would have been entitled to receive spousal support, but she still would have been required to pay for her own living expenses wherever she resided. Thus, the use of spousal support to pay the mortgage did not result in any loss to the wife in this case.

27As to the property, or capital, aspect of the dispute, the FLA sets out a process for dealing with the matrimonial home, and other matrimonial assets. Essentially, the matrimonial home will be included in the NFP of both parties and will be part of the calculation of the equalization payment. Section 5(6) of the FLA allows for deviation from the usual equalization payment calculation in some circumstances, but none of those circumstances apply in the present case.

28It must be recognized that at all times the husband and the wife each had an equal interest in the matrimonial home. Since the separation the wife has had the use and enjoyment of not only her interest in the matrimonial home, but also the husband’s interest in the matrimonial home. Therefore, if the wife’s use of her spousal support results in a reduction in the principal amount of the mortgage, that can be viewed as a return on the husband’s capital investment in the matrimonial home.

29Lastly, even though the wife used her spousal support to pay the mortgage, there is no guarantee that this arrangement would have resulted in a net gain for the husband or the wife. In some cases, by the date of the trial the equity in the matrimonial home is less than it was as at the date of the separation. Whatever changes occurred after the date of separation, those changes, positive or negative, are to be shared by the husband and wife until the home is sold or the matter is otherwise resolved.

30Therefore, I find that there will be no specific credit to the wife because of the reduction of the principal of the mortgage after the date of separation.

31The next property issue is the question of whether, in her NFP statement, the wife should be entitled to deduct the value of the house that she owned as at the date of marriage. I find that the wife owned a residence on Pine Street in Thorold prior to the marriage. The husband and the wife resided there together for approximately nine months prior to the marriage, and after the marriage until the Pine Street house was sold in July 2000. When the house was sold, the net proceeds were approximately $34,000.

32The husband submits that the wife should not be permitted any deduction for this property because the wife did not provide a proper valuation as of the date of marriage, and because the husband did some renovation work to the house. I accept that the husband did some renovations prior to the marriage, but in my view those renovations were small compared to the overall value of the house.

33I find that even though the Pine Street house was a matrimonial home for a short time, the value of that house as at the date of marriage should be deducted from the wife’s NFP as per the decision in Nahatchewitz v. Nahatchewitz 1999 787 (ON CA), [1999] O.J. No. 3154 (OCA). Therefore, I accept the wife’s suggestion that she be allowed a deduction for the Pine Street house in the amount of $22,000.

34Having made the aforementioned findings regarding the property issues, I turn to the calculation of the equalization payment.

35In summary, each of the parties will have identical amounts in their NFP Statements for the value of the matrimonial home, the husband’s pension, the mortgage, the line of credit, the contents of the home, the electronics, and the jewelry.

36The husband’s NFP will include the value of the trailer and the trailer debt, aforementioned. The husband also had three life insurance policies with a total value of $16,595 as at the date of the separation, one vehicle valued at $5,000, and a small bank account of $210. The husband will be allowed a deduction of $4,000 for the value of the three life insurance policies as of the date of marriage.

37The wife’s NFP will include two vehicles valued at $7,000, and a small bank account of $422. The wife will be allowed the deduction for the Pine Street house in the amount of $22,000.

38The net difference in the NFPs is $30,254, resulting in an equalization payment from the husband to the wife in the amount of $15,127. Judgment will go accordingly, and this amount will be secured against the husband’s interest in the matrimonial home.

CHILD SUPPORT ISSUES

39The wife submits that the husband underpaid child support from November 2011 to July 2013 because the husband did not pay full Guideline support. In my view, because the children spent 50% of their time with each of the parties, it would not be reasonable for the husband to pay full Guideline support. Therefore, I accept that the sum of $960 per month for child support was a reasonable amount for the husband to pay up until July 2013.

40From July 1, 2013 the parties have agreed that child support would be paid by the wife in the amount of $335 per month based on her income of $22,130 per year. The parties have also agreed to various terms with respect to s.7 expenses and disclosure. An order will go in accordance with paragraph 11(c) to (h) of the PMS.

41Accordingly, I find that there are arrears of child support owed by the wife to the husband in the amount of $335 per month from July 1, 2013, for a total of $2,680 as of February 28, 2014. Judgment will go accordingly, and this amount will be secured against the wife’s interest in the matrimonial home.

SPOUSAL SUPPORT ISSUES

42I accept the wife’s submission that the husband underpaid spousal support from November 2011 to June 2013. I also accept the husband’s submission that he overpaid spousal support from July 1, 2013 to the present time.

43I find that the proper amount of spousal support that should have been paid is as follows:

$1,800 per month for November and December 2011
$1,300 per month for all of 2012
$1,100 per month for the first six months of 2013
$750 per month from July 1, 2013 to present

44Accepting that the husband actually paid $920 every month in spousal support, I find that he underpaid spousal support in the amount $7,400 up to June 30, 2013, and thereafter overpaid in the amount of $1,360 as of February 28, 2014.

45Therefore, I find that the husband owes to the wife for arrears of spousal support the sum of $6,040 as of February 28, 2014. Judgment to go accordingly and this amount will be secured against the husband’s interest in the matrimonial home.

46In addition, I order that ongoing spousal support be paid at the rate of $750 per month commencing March 1, 2014. I will not make any order for termination or review of the spousal support order.

OTHER MATTERS

47Both parties made claims for reimbursement for s.7 expenses. In my view neither party properly notified the other of their intention to seek reimbursement of s.7 expenses. There will be no amount ordered payable by either party.

48The husband requested reimbursement for President’s Choice Financial charges regarding a problem with the mortgage. I am not convinced that the wife should be responsible for these charges. Therefore, this claim will not be allowed.

49The husband claimed reimbursement of $2,200 from the wife because the wife used the line of credit in September 2011 to purchase a vehicle. I find that the wife made certain lump sum payments into the line of credit immediately before using the line of credit to purchase this vehicle. Accordingly, I will not allow this claim.

50I will allow the husband’s claim against the wife with respect to the RESP. I find that the wife collapsed the RESP account that had been set up for the children without notification to the husband. I find that the RESP account at the time held a balance of $10,150. After the wife collapsed this account, she used the money for her own personal expenses. In my view, this was highly inappropriate. Therefore, there will be an order that the wife forthwith pay the sum of $10,150 into an RESP account for the children. That payment will also be secured against the wife’s interest in the matrimonial home.

51In summary, there will be judgment in accordance with these Reasons for Judgment and the Partial Minutes of Settlement as set out above. If either party wishes to make a claim for costs, written submissions may be delivered to the trial coordinator within 20 days of the date of this decision.

Henderson J.