ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SANDRA ADELE DUNN
Applicant
– and –
STEPHEN RODNEY DUNN
Respondent
Self-represented
Self-represented
HEARD: November 28, 2014
REASONS FOR ORDER
justice e. gareau:
1On November 28, 2014, the court heard the motion to change at Tab 1 of the continuing record. The motion to change was issued on September 29, 2014. The moving party is Stephen Rodney Dunn. The responding party is Sandra Adele Dunn. In the motion to change, Mr. Dunn seeks to reduce the final support order granted on December 7, 2011 by The Honourable Madam Justice P.C. Hennessy.
2The order granted by Madam Justice Hennessy was made after a trial. The issues before the court were spousal support and the equalization of net family property.
3Madam Justice Hennessy released written reasons which are lengthy and comprehensive. The spousal support order arrived at by Madam Justice Hennessy provides that Mr. Dunn pay to Mrs. Dunn the sum of $4,000.00 per month. The order provides that this support order is reviewable after five years on notice by Mrs. Dunn.
4Mr. Dunn seeks to vary this final support order by reducing it from $4,000.00 per month to $1,400.00 per month effective June 1, 2014.
CAN THE ORDER BE REVIEWED:
5The first issue that the court must consider is whether a material change in circumstances has been established to permit a review of the current spousal support order and, if so, whether the provisions of the order of Madam Justice Hennessy permit a review at this time.
6The order of December 7, 2011 is based on Mr. Dunn having an income of $225,000.00 per year. This income was reduced by the court for the calculation of spousal support under the Spousal Support Advisory Guidelines to $148,000.00 per year. The deduction in Mr. Dunn’s income was made by the court to take into account payment by Mr. Dunn of the joint debt of the parties, which was substantial. Madam Justice Hennessy concluded that Mr. Dunn would be paying Mrs. Dunn’s share of the joint debt and accordingly, this should be adjusted for both in the calculation of Mr. Dunn’s income and the range of support that should be paid under the Spousal Support Advisory Guidelines.
7A good summary of the rationale adopted by Madam Justice Hennessy in arriving at her decision on the issue of spousal support is found in paragraphs 38, 39, 40, 41 and 42 of her Reasons for Judgment which reads as follows:
“[38] In light of the above, I am of the view that Mr. Dunn faces the significant likelihood of being called upon to pay Mrs. Dunn’s share of the joint debt. At this time, she has no assets through which she could later indemnify Mr. Dunn if he were obliged to cover her share of the debts.
39In order to calculate support, I am of the view that I should look at the income available to Mr. Dunn after financing his share of the joint debt and his own debt total approximately $192,000. I am satisfied that he has presented credible evidence of the cost of servicing and repaying this debt. He proposed to consolidate this debt with a bank loan for five years at the rate of seven per cent per year. The cost to him would be approximately $3,700. per month, gross up for taxes is $6,367. per month or approximately $76,400. per annum. If Mr. Dunn continues to earn at the rate of $225,000.00 per annum this would leave him with $148,600. after servicing the debt from which he could pay support.
40Taking into account the imputed income, the Guidelines set out the following ranges of support based on an income of $148,000. for Mr. Dunn and $25,000. imputed to Mrs. Dunn:
- Low range $3,844
- Mid range $4,484
- High range $5,040
41In these very unusual circumstances, I am prepared to take into consideration the contingency that Mr. Dunn would have to satisfy the entire joint debt when assessing the range of spousal support. I am of the view that support should be towards the lower end of the range.
42The mid-range represents an income split of 53.1 per cent to Mr. Dunn and 46.9 per cent to Mrs. Dunn. At the low range of the percentage split is 56.8 per cent to Mr. Dunn and 43.2 per cent to Mrs. Dunn. I find that $4,000. per month is the appropriate amount of monthly support during this five year period when the couple must deal with the debt built up during the marriage.”
8In arriving at the decision on the issue of spousal support, Mr. Dunn’s income was found to be $225,000.00 per year to be reduced to $148,000.00 per year in taking into account the effect of Mr. Dunn servicing the joint debt of the parties.
9In calculating the quantum of spousal support, the court found that Mrs. Dunn was under-employed and imputed income to her at $25,000.00 per annum. In this regard, Madam Justice Hennessy made the following comments at paragraphs 23, 24, and 25 of her Reasons for Judgment with respect to the income of Mrs. Dunn.
“[23] I am satisfied that Mrs. Dunn is intentionally under-employed and has been for some time. I accept that in the first year post separation, she was in a very emotional state and this impaired her ability to work. She did not work at her court house position from June to September, 2009. Mrs. Dunn did not identify any current health concerns that would impair her ability to work.
24On these facts, I am prepared to impute income to Mrs. Dunn for the purpose of determining the quantum of spousal support. I am of the view that $25,000. Per annum should be imputed to her. She is personable, presentable and articulate. She has a vehicle and she has no other demands on her time. She has lived in the community of Sault Ste. Marie for most of her life and has a wide circle of contacts. Mrs. Dunn has not taken all of the opportunities available to her to either obtain paid further employment or obtain qualifications to do so. There was no explanation for why she has waited so long to re-write her real estate agent phase one exam. Her court house work pays $20 per hour. She did not deny that there were more hours available to her.
25This imputed figure is low considering what appear to be Mrs. Dunn’s talents and abilities. However, her long period out of the work force should be taken into consideration as she makes the transition to the paid labour market. If she is successful in obtaining her real estate license within the next year, she would have more income available to her.”
10Clearly, on a review of the Reasons of the trial judge, the spousal support order of $4,000.00 per month commencing November 1, 2011 was calculated on Mr. Dunn having an income of $225,000.00 per year, reduced to $148,000.00 per year on account of the joint debts which he has to assume and on Mrs. Dunn having an imputed income of $25,000.00.
11As to the present income of the parties, on a review of the continuing record and on hearing the submissions of the parties when this matter was argued, I am satisfied that the current income of Mr. Dunn is $160,000.00 per annum. He has changed employers from Investors Group to RBC Dominion Securities and this has resulted in a reduction of his income from the $225,000.00 level assessed by Madam Justice Hennessy to the present level of $160,000.00. I am satisfied that Mr. Dunn has experienced a reduction from the income of $225,000.00 before taking into account the payment of the joint debts.
12As to the income of Mrs. Dunn, I find that her current income is $35,000.00 per annum. The financial statement for Mrs. Dunn at Tab 6 of the continuing record deposes that her monthly income is $2,913.54, which is separate from the support that she receives from Mr. Dunn. This monthly income converts to $34,962.48 per year. During oral argument, Mrs. Dunn indicated to the court that what appeared in her financial statement for her monthly income was a mis-calculation, although she had difficulty providing a satisfactory explanation as to what that mis-calculation was. Mrs. Dunn indicated orally that from recent real estate sales, she expects her 2014 gross income to be approximately $32,000.00. I accept the income that Mrs. Dunn deposes under oath that she receives per annum of $35,000.00 per year. Mrs. Dunn is now fully employed as a licensed real estate agent in Sault Ste. Marie, Ontario and is capable of earning $35,000.00 per year and likely more from that employment. I find Mrs. Dunn’s income to be $35,000.00 per year.
13In summary, Mr. Dunn’s income has gone down since the December 7, 2011 order (from $225,000.00 to $160,000.00) and Mrs. Dunn’s income has gone up since the December 7, 2011 order (from $25,000.00 to $35,000.00).
14These changes in income would normally constitute a material change in circumstances which would permit a review of the December 7, 2011 order. However, there are unusual circumstances in this case given the particular wording in the written Reasons for Judgment of Justice Hennessy.
15In paragraph 44 of her Reasons, Justice Hennessy makes the following conclusion on the issue of spousal support:
“[44] There shall be an order for spousal support payable to Sandra Dunn in the amount of $4,000.00 per month effective November 1, 2011. This support order is reviewable after five years on notice by Mrs. Dunn. The purpose of the review is to assess, among other things, whether the debt has been retired. It is predictable that Mr. or Mrs. Dunn may enjoy increased income during this time. These should not trigger a variation application.”
16One way of interpreting the aforementioned comment by the trial court is that there will be no review of the support order for five years, after which a review is permitted. That approach would not allow Mr. Dunn to bring the motion to change that he commenced on September 29, 2014. In my view, the preferred approach is to read paragraph 44 of the Reasons for Judgment to not permit a review in the five-year period even if there is an increase in the incomes of Mr. Dunn or Mrs. Dunn during that period of time. This approach allows Mr. Dunn to pay down the joint debt of the parties more expeditiously if his income increases, and he should be allowed to do that if he is able without the spousal support order being increased. Justice Hennessy’s comment in paragraph 44 that “The purpose of a review is, among other things, to see whether the debt has been retired.” supports that view.
17In other words, by paragraph 44 of the Reasons of the trial judge, Mrs. Dunn would be precluded from asking that the support order be reviewed if Mr. Dunn’s income increased during the five-year period before the automatic review. In my view, there is nothing in the wording in paragraph 44 of Madam Justice Hennessy’s Reasons which prevents a review of the spousal support order prior to five years if there is a decrease in Mr. Dunn’s income.
18Accordingly, I find that a review of the spousal support order of December 7, 2011 on the basis of a reduction in the current income of Stephen Dunn is not barred by the provisions of the December 7, 2011 order and additionally, that a material change of circumstances has been established by Mr. Dunn which would permit such a review.
THE REVIEW ON ITS MERITS:
19Attached to Mr. Dunn’s financial statement at Tab 3 of the continuing record are copies of documents verifying his income for the three years since the December 7, 2011 spousal support order was granted. These documents indicate that Mr. Dunn has had the following gross income:
2012 $279,600.80
2013 $238,402.00
2014 $159,624.00
20The average income for 2012, 2013 and 2014 using the aforementioned amounts is $225,875.60. Mr. Dunn’s average income for the past three years has been the same as Justice Hennessy assessed his initial income at prior to an adjustment for the payment of the joint debt when she ordered the present level of spousal support. Justice Hennessy set Mr. Dunn’s level of income at $225,000.00 prior to the adjustment for the payment of joint debts. Mr. Dunn’s average income over the past three years has been $225,875.60. The year immediately after the spousal support was set, Mr. Dunn’s income was actually significantly higher ($279,600.80) than the income on which the spousal support order was based ($225,000.00). Mr. Dunn’s income was also higher in 2013 ($238,402.00). I am cognisant of the fact that the income of Mr. Dunn was assessed at a lower figure ($148,000.00) to take into account the payment of joint debts, but the fact remains that the base income Justice Hennessy started at before making the adjustment for debts was $225,000.00. Mr. Dunn earned a larger base amount in both 2012 ($279,600.80) and 2013 ($238,402.00).
21Only in 2014 did Mr. Dunn earn a lower base amount ($159,624.00) than the base amount used by Justice Hennessy in calculating the current spousal support order before a reduction to account for the payment of joint debts ($225,000.00). Mr. Dunn accounts for the reduction in this income due to a transitioning from his former investment firm, Investors Group, to his current investment firm, RBC Dominion Securities. Simply put, Mr. Dunn had the ability to earn more income at Investors Group than he is capable of earning at RBC. Mr. Dunn indicates that his present earning level at $160,000.00 per year is the income level he will be earning in the future due to the payment structure in place at RBC Dominion Securities. Although Mr. Dunn was asked in oral argument why he changed his employers, the best he could say was that there was a “toxic” atmosphere at Investors Group, which he attributes to the frequent visits by Mrs. Dunn and the employment of that firm of Mrs. Dunn’s sister.
22In my view, the evidence presented by Mr. Dunn in the continuing record and his explanation given orally when this matter was argued is entirely unsatisfactory to provide a reasonable and adequate explanation as to why he changed employment from Investors Group to RBC Dominion Securities. If Mr. Dunn had remained at Investors Group, it is unlikely that he would have suffered a reduction in income below the income of $225,000.00 attributed to him (before deduction for debt) by the trial judge. It is fair to say that in some respects that Mr. Dunn brought the reduction in income he is now experiencing on himself by moving investment firms. This must be taken into account when examining the merits of the motion to change brought by Mr. Dunn.
23Another factor that also must be considered by the court is whether the joint debt has been reduced from the time Justice Hennessy made the spousal support order to the present time. This is an important consideration because the amount of the joint debt to be assumed by Mr. Dunn was a factor in the trial court reducing his income from $225,000.00 to $149,000.00 per year for the purpose of spousal support and a factor in the court ordering an amount on the low end of the Spousal Support Advisory Guidelines. This is clearly indicated by the Reasons for Judgment of Madam Justice Hennessy.
24The amount of joint debt that Mr. Dunn was assuming as of December, 2011 was significant. Paragraphs 3, 4, and 5 of the trial judge’s Reasons for Judgment set out the amounts. Those paragraphs read as follows:
“[3] At the time of separation, the parties had significant debt. The parties agree that their current joint debt is $138,023.
4The parties further agree that Mr. Dunn has additional debt of $123,077.33 for a combined total of $261,100.33.
5Mr. Dunn has made payments on the joint debt of $108,391.43 since the date of separation. Of this amount Mrs. Dunn disputes approximately $5,000.”
25At the hearing of the motion to change, Mr. Dunn indicated to this court that at the time of the December 7, 2011 order there was debt of $261,000.00 of which he assumed $221,000.00. These approximate amounts are consistent with the findings of Hennessy, J. in her Reasons for Judgment. Mr. Dunn also advised this court that as of November 28, 2014, he had paid down the debt to $70,000.00. That means that the debt has been paid down by two-thirds, a substantial amount since the spousal support order was made.
26The substantial reduction in the debt is a factor in assessing the value of the present income of Mr. Dunn and in comparing it with his current earnings. Justice Hennessy reduced Mr. Dunns income for support purposes from $225,000.00 yearly to $149,000.00 yearly to take into account that he was servicing $221,000.00 worth of debt. The same reduction in Mr. Dunns income cannot be made at the present time given the fact that he has reduced the debt from $221,000.00 to $70,000.00. Based on Mr. Dunn presently having $70,000.00 worth of debt remaining to service by payments, the reduction in his income would be minimal compared to the earlier reduction. In my view, Mr. Dunn`s present earnings of $160,000.00 would not be reduced significantly given the amount left owing presently on the debt that he has paid since the date of separation.
27As set out in paragraph 40 of the Reasons for Judgment of Hennessy, J., the range using the Spousal Support Advisory Guidelines with Mr. Dunn having an income of $148,000.00 and Mrs. Dunn having an imputed income of $25,000.00 was between $3,844.00 to $5,040.00 with a mid-point of $4,484.00. Due to the debt load, Mr. Dunn was assuming Justice Hennessy opted to order an amount for spousal support and ordered support in the amount of $4,000.00 per month.
28Based on the current incomes of the parties (Mr. Dunn at $160,000.00 per year and Mrs. Dunn at $35,000.00 per year), the Spousal Support Advisory Guidelines indicate a range between $3,906.00 per month to $5,145.00 per month with a mid-point of $4,557.00 per month. At the present amount of spousal support, Mr. Dunn would be paying support at the low end of the range.
29The financial statements filed by the parties in the continuing record indicate that Mr. Dunn resides in a home with a value of $600,000.00. Mrs. Dunn resides in rental accommodation. Although Mr. Dunn shares this accommodation with another person, his share of accommodation expenses exceeds those of Mrs. Dunn. With a pared down income, it would be expected that Mr. Dunn would pare down his expenses as well and reduce his standard of living, but on the evidence before me, this does not appear to be the case. I find it difficult to accept Mr. Dunn`s plea of poverty when he resides in a home valued at $600,000.00.
30Taking into account all of the aforementioned factors, I am not satisfied that the moving party, Stephen Dunn, has established a material reduction in his income, given the payment down of debt from the date of the order to the present time, to justify paying less spousal support to Mrs. Dunn than is provided for in the December 7, 2011 order of Hennessy, J. In my view, if the issue of spousal support was decided at this time on a de novo hearing, Mr. Dunn would be paying no less in spousal support than he is paying now given the present income of the parties and the current amount owing on the debt he assumed that arose during the marriage of the parties.
31Accordingly, the motion to change issued on September 29, 2014 at Tab 1 of the continuing record is dismissed. It is dismissed, on a without-cost basis, given the current financial situation of the parties and the fact that they were both self-represented throughout this proceeding.
Justice E. Gareau
Released: December 17, 2014
COURT FILE NO.: 1826/10
DATE: 2014-12-17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SANDRA ADELE DUNN
Applicant
AND
STEPHEN RODNEY DUNN
Respondent
REASONS FOR ORDER
Justice E. Gareau
Released: December 17, 2014