CITATION: Sartain v. McCabe, 2015 ONSC 2198
COURT FILE NO.: 847/12 (St. Catharines)
DATE: 2015/04/08
ONTARIO
SUPERIOR COURT OF JUSTICE – FAMILY COURT
BETWEEN:
Dallas Ernest Sartain
Applicant
- and -
Isabel Marie McCabe
Respondent
Daniel Toppari, for the Applicant
The Respondent appeared without counsel
HEARD: March 10 and 11, 2015
R. A. Lococo, J.
REASONS FOR JUDGMENT
I. Introduction
[1] Dallas Sartain and Isabel McCabe separated in October 2011 after being married less than three years and cohabiting for less than six. At the time of separation, Mr. Sartain was 43 years old and Ms. McCabe was 49. They were divorced effective August 2013. Prior to their marriage, they initially made their home in the Niagara Region, in a house owned by Ms. McCabe. Mr. Sartain’s twin sons from a previous marriage resided with them until sometime in 2007, when the sons, then 18 years old, went to live with their mother.
[2] During the time that the parties cohabited, Mr. Sartain worked as a plumber at various construction and maintenance jobs arranged through his union. His income was variable depending on available work. For example, his total income (net of union dues) was $53,214 in 2010, $73,543 in 2011 (the year of separation), $57,646 in 2012 and $62,279 in 2013. His work often required him to be away from home during the week, returning on weekends. When he was between jobs, he spent the time at home and sometimes collected Employment Insurance. One of his out-of-town plumbing jobs was with a contractor at Bruce Nuclear in Bruce County, initially for a five month period. He subsequently accepted a second assignment at Bruce Nuclear.
[3] When living in Niagara, Ms. McCabe worked four days per week with a law firm as a debt collector, sometimes working from home. She also supplemented her income with part-time work as a server and bartender. Like Mr. Sartain, her income was variable. In 2006, her last full year living in Niagara, her total income was $53,716.
[4] In 2007, Mr. Sartain and Ms. McCabe moved from Niagara to a rented house in the village of Paisley in Bruce County. In May 2008, they purchased the Paisley residence. They got married later that year. Initially, Ms. McCabe retained ownership of her previous Niagara residence and a second residential property that she had previously rented out. Because of previous unfavourable experience with tenants, Ms. McCabe was not willing to rent out those properties once they left Niagara. The properties were subsequently sold at a loss.
[5] From the parties’ new residence in Paisley, Mr. Sartain was able to commute to his employment at Bruce Nuclear. However, that employment came to an end by early 2009, and Mr. Sartain resumed the pattern of out-of-town work. Ms. McCabe initially continued her previous employment with a Niagara law firm as a debt collector (working from home), but her debt collection work came to an end a short time later, which Ms. McCabe attributed to the 2008 financial crisis. She was unable to obtain work as a bill collector in Bruce County or the vicinity, but at various times held other short term employment, principally as a server or bartender.
[6] After the parties separated in October 2011, Mr. Sartain moved back to the Niagara area. He has since remarried and now resides in a house owned by his current wife. He continues to be employed as plumber, currently with ArcelorMittal in Hamilton.
[7] Following the parties’ separation, Ms. McCabe continued to reside in the matrimonial home in Paisley, where she remained at the time of trial. She vacated the matrimonial home in the spring of 2013 when she found employment in Barrie, first as a server, then with a private investigation firm. However, she returned to the matrimonial home by the end of the summer of 2013. She is currently employed part-time as a server at a restaurant in Walkerton.
[8] After the parties separated, they agreed that the Paisley property would be sold. The property was initially listed for sale in August 2012. Otherwise, there was no agreement between the parties relating to the division of property or payment of debts or expenses. As well, each party alleged that the other’s actions interfered with the sale of the matrimonial home. Mr. Sartain continued to contribute to mortgage payments and property taxes relating to the Paisley property, but refused to contribute to other expenses, including property insurance premiums. Insurance on the property was cancelled in late 2014 for nonpayment of premiums. After separation, Mr. Sartain assumed responsibility for payments on the parties’ joint line of credit, the balance of which was approximately $54,000 at the date of separation and is now approximately $39,000.
[9] In December 2012, Mr. Sartain brought the application that is now before the court. Among other things, Mr. Sartain sought the following relief:
An order that the matrimonial home be listed for sale, and the proceeds applied to the parties’ debts;
Occupation rent for Ms. McCabe’s use of the matrimonial home following separation;
Payment by Ms. McCabe of her share of the joint debt of the parties; and
Equal division of the difference between the net family properties of the parties.
[10] In February 2013, Ms. McCabe filed an Answer in response to Mr. Sartain’s application. Among other things, Ms. McCabe sought the following relief:
Spousal support retroactive to the date of separation;
Exclusive possession of the matrimonial home pending its sale;
Payment by Mr. Sartain of half of the carrying costs of the matrimonial home pending its sale, including mortgage payments, property tax and insurance premiums;
Indemnification of her liability under the parties’ joint line of credit with Scotiabank; and
Unequal division of the difference between the net family properties of the parties.
[11] There was a two day trial of this application in March 2015. The trial had been scheduled twice previously, but had been adjourned for reasons beyond the parties’ control. Mr. Sartain was represented by counsel experienced in family law matters. Ms. McCabe was not represented by counsel throughout this action, including at trial.
[12] By the time of trial, the principal remaining issues related to spousal support and sale of the matrimonial home. Practically speaking, many of the other claims in the originating documents were no longer relevant, given the passage of time, intervening events and the current financial situation of the parties. For example, both parties have provided net family property statements indicating a zero balance. That issue was also the subject of a Request to Admit from the Applicant, which Respondent did not contest. In these circumstances, the final order will dismiss the parties’ respective claims with respect to division of net family property.
[13] That does not mean, however, that it would be inappropriate to deal with some of the other matters raised in the Application and the Answer. For example, as argued by the parties at trial, it may well be appropriate to consider such matters as occupation rent and the sharing of debts and expenses in the context of consideration of entitlement to spousal support, rather than as separate heads of relief.
[14] Accordingly, in the balance of these reasons, I address the principal remaining issues, the sale of the matrimonial home and spousal support. In that context, I will address other claims initially made by the parties, to the extent relevant.
II. Sale of the matrimonial home
[15] The matrimonial home in Paisley continues to be listed for sale. Both parties want the property sold. The balance outstanding on the mortgage is approximately $215,000. According to the testimony of the listing realtor, the property is expected to sell for less than that amount. She also testified that the principal reason the property has not sold is that the price the parties are willing to accept for the property substantially exceeds its expecting selling price.
[16] Ms. McCabe did not object to Mr. Sartain’s request for an order that the Paisley property continue to be listed for sale. An order to that effect will issue. The order will also require the parties to co-operate with the listing and sale of the matrimonial home. The order will not direct how the proceeds of the sale will be applied. No useful purpose would be served by doing so, since it does not appear likely that the proceeds will be sufficient to satisfy the amount outstanding under the mortgage in full.
III. Spousal support
[17] I will turn now to the issue of spousal support. As previously noted, in her February 2013 Answer, Ms. McCabe claimed spousal support retroactive to the date of separation. There was no evidence before me that Ms. McCabe provided Mr. Sartain with notice of her intention to seek spousal support prior to her Answer.
[18] In late 2014, after the second postponement of the trial, Ms. McCabe brought a motion seeking temporary spousal support pending trial. That motion was dismissed. The questions of spousal support and the extent of Mr. Sartain’s obligation to contribute to the matrimonial home expenses were left to be determined at trial, which was scheduled to commence less than three months later.
[19] In her submissions at trial, Ms. McCabe indicated that she was no longer seeking periodic spousal support payments. Instead, she is seeking a lump sum from Mr. Sartain in order to allow her to move out of the matrimonial home and back to the Niagara Region. Once she is back in Niagara, she believes she will be able to quickly re-establish her previous career in debt collection. She would also like Mr. Sartain to buy out her interest in the matrimonial home. As well, she would like her name removed from their joint line of credit with Scotiabank in order to avoid jeopardizing her credit rating.
[20] I am not able to completely satisfy Ms. McCabe’s wish list by order of this court. I do not see any basis for ordering her name removed from the joint line of credit. In any case, she did not claim that relief in her Answer, although she did request an order that Mr. Sartain indemnify and hold her harmless with respect to their joint line of credit.
[21] Similarly, I see no basis for an order requiring Mr. Sartain to buy out her interest in the matrimonial home. In any case, the evidence before me indicates a negative net value for the matrimonial home after taking into account the amount owing on the mortgage. On a buyout in these circumstances, payment would be expected to flow from Ms. McCabe to Mr. Sartain, rather than in the other direction.
[22] The court does, however, have the power to order payment of spousal support, whether on a periodic basis or as a lump sum. In my decision in Osterlund-Lenahan v. Lenahan,[^1] I reviewed the principles relating to entitlement to spousal support in the following terms:
The principles to be applied when considering a claim for spousal support were considered by the Supreme Court of Canada in Moge v. Moge [1992 CanLII 25 (SCC), [1992] 3 S.C.R. 813] and Bracklow v. Bracklow [1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420]. The latter decision in particular recognized that entitlement to spousal support may be compensatory, need-based or contractual in nature, depending on the circumstances of the particular case.
When considering the compensatory basis for spousal support, the courts have endorsed an expansive approach, its purpose being the equitable distribution of the economic consequences of the relationship. The courts have recognized many different circumstances that could give rise to compensatory claims, the most common being where a spouse has sacrificed labour force participation to care for dependent children. Spousal support granted on that basis provides compensation for the loss of economic opportunity resulting from the roles adopted during the marriage.
The courts have also recognized that there is a non-compensatory basis for spousal support based on need alone, even when the need does not arise from the roles adopted during the marriage. The extent of the former spouse’s obligation may be dependent on many factors, including the length of the relationship, the way the relationship was structured, ability to pay and any re-partnering of the parties.
[23] In his submissions, Mr. Sartain’s counsel contested Ms. McCabe’s claim for spousal support on two principal bases. First, Ms. McCabe has not established that she is entitled to spousal support, applying the legal principles referred to above. Second, any amount of spousal support that Ms. McCabe may otherwise be entitled to is more than offset by the joint obligations of the parties that he has assumed since their separation.
[24] Dealing first with the entitlement issue (independent of the offset issue), I agree with Ms. McCabe that she has established entitlement to spousal support, applying the principles referred to previously. The basis for her entitlement is primarily non-compensatory, that is, on the basis of need. After the separation, Ms. McCabe was left living alone in a location that she no longer wished to be, in a house she could no longer afford to run, and without the employment opportunities that would allow her to pay her expenses. To some extent, the continuation of this situation is of her own making, since she is unwilling to take the financial hit associated with selling the matrimonial home at its apparent market value and relocating to a location where she is confident of finding remunerative employment. However, Mr. Sartain also bears responsibility for that situation, since he has shown no more willingness than Ms. McCabe to sell the property for a price that would allow a sale to occur.
[25] By contrast to Ms. McCabe’s situation after separation, Mr. Sartain has remarried, lives in a house owned by his wife and continues to earn a reasonable living as a plumber, as he has for many years. Granted, Mr. Sartain is not completely out of the woods financially, with continuing financial obligations, including those incurred during his time with Ms. McCabe. However, the evidence before me indicated that Mr. Sartain has had chronic financial difficulties dating from before his time with Ms. McCabe notwithstanding his income over the years.
[26] In my view, in all the circumstances, there is no doubt that the current disparity between the situations of Ms. McCabe and Mr. Sartain establishes a spousal support obligation to Ms. McCabe, without taking into account the offset issue.
[27] Ms. McCabe also argued that spousal support was also justified on a compensatory basis. I find this argument to be less compelling. She relied in part on the child care obligations she undertook with respect to Mr. Sartain’s children, especially when he was away working on out-of-town jobs during the week. However, Mr. Sartain’s children, then in their mid to late teens, lived with them for less than two years, and there is no evidence that her earning capacity was thereby compromised during that period. She also argued that her earning capacity was in fact compromised when she moved from Niagara to Paisley, and the evidence provides some support for that position. However, the evidence also indicated that the decision to move to Paisley was made jointly by the parties and the demise of her debt collection work was caused as much by the 2008 recession as her move to Paisley. She further argued that early in their relationship, she had paid some of Mr. Sartain’s debts incurred during his previous common law relationship and used also her skills in financial management to put him back on the right track. While I accept her evidence that she assisted Mr. Sartain financially early in their relationship, she also benefited from his superior earning power while they were together. As well, the financial decisions they both made during their relationship, including her ownership of one or two additional residential properties at various times without rental income, calls into question her self-proclaimed skills in financial management.
[28] Based on the foregoing analysis, I find that Ms. McCabe has established her entitlement to spousal support, based primarily on non-compensatory grounds. I will therefore turn to the second point raised by Mr. Sartain’s counsel, that is, that any amount that Ms. McCabe may be entitled to by way of spousal support is more than offset by Mr. Sartain’s assumption of responsibility for their joint debt.
[29] To support his position that it would be appropriate to offset such amounts against any spousal support otherwise be payable, Mr. Sartain’s counsel relied on the reasoning of Mr. Justice R.D. Gordon of this court in his recent decision in Stafford v. Stafford.[^2] I agree with Justice Gordon that such an offset may be made in appropriate circumstances.
[30] On the assumption of spousal support entitlement (but without conceding the point), Mr. Sartain’s counsel provided a DivorceMate calculation, based on an average income calculation for each party in the period 2010 to 2013 (being $61,746 for Mr. Sartain and $18,345 for Ms. McCabe). That income, based on cohabitation for five years, resulted in suggested monthly spousal support payments (using the “without child support” formula) of $271 (low), $316 (mid) and $362 (high), for a duration of 2.5 to five years from the date of separation, as provided for in the Spousal Support Advisory Guidelines.
[31] Mr. Sartain’s counsel argued that the obligations undertaken by Mr. Sartain relating to Ms. McCabe’s half share of the line of credit debt alone would more than offset any amount that may be payable to Ms. McCabe by way of spousal support. In this regard, he relied on evidence before the court that by maintaining his current monthly payments of approximately $800 per month on the line of credit debt, it would take approximately five years to pay off the line of credit. He argued that in the circumstances of this case (including the duration of the relationship, the absence of children and relative earning capacity of the parties), the amount and duration of spousal support payments should be set at the lower end suggested by the DivorceMate calculation. He also argued that even if you took the longest duration of five years and the “high” monthly payment of $362, half of his monthly payments on the line of credit would still exceed suggested monthly spousal support payments.
[32] Mr. Sartain’s counsel also argued that there should be an additional notional offset against any spousal support obligation for occupation rent resulting from Ms. McCabe’s occupation of the matrimonial home almost continuously from the date of separation. In this regard, he argued that Mr. Sartain had paid his fair share of the property expenses by equally sharing the mortgage payments and property taxes. In his submission, it was appropriate that Ms. McCabe pay the other expenses, given that she has had the benefit of living in the matrimonial home rent free.
[33] For her part, Ms. McCabe argued that the DivorceMate calculation provided by Mr. Sartain understated the amount that should be payable to her. She questioned whether the income attributed to Mr. Sartain reflected his earning capacity. She also took the position that their period of cohabitation was closer to six years rather than five years. In this regard, she testified that they started living together in November or December 2005 when she began staying regularly at the residence (which she owned) in which Mr. Sartain lived as a tenant with his sons. According to the testimony of both parties, she gave up her separate residence and moved her belongings into the residence occupied by Mr. Sartain and his sons a few months later.
[34] With respect to the joint line of credit, Ms. McCabe argued that it was appropriate that he assume all or at least more than half of the obligations under the joint line of credit, since he was primarily responsible incurring that debt. In this regard, she provided evidence of items purchased by Mr. Sartain (including an electric guitar purchased through Kijiji) that she considered to be significant purchases solely for Mr. Sartain’s benefit. She also relied on her own testimony as to Mr. Sartain’s tendency toward profligate spending, compared to her own frugal ways. As well, Ms. McCabe argued that Mr. Sartain should be able to retire the amount outstanding under the line of credit in as little as two years, although it is not clear from the evidence how she arrived at that conclusion.
[35] Ms. McCabe also argued that Mr. Sartain had not been paying his fair share of expenses relating to the matrimonial home, which among other things undermined his claim for an offset based on any liability she may have for occupation rent. In particular she pointed to his failure to pay his share of property insurance premiums. As a result, their continued ownership of the property was in jeopardy, given the obligation under the mortgage to maintain adequate insurance coverage. She also noted that the water and sewage bill included a fixed sewage charge that did not depend on the amount of water used during the billing period.
[36] Having considered the submissions of both parties, I have concluded that it would not be appropriate to order Mr. Sartain to pay any amount to Ms. McCabe by way of spousal support. I am satisfied that, with the additional obligations imposed on Mr. Sartain outlined below, any amount that he would otherwise owe to Ms. McCabe for spousal support would be offset by the obligations he has undertaken or will be subject to as a result of my order. The most significant of those obligations relate to the parties’ joint line of credit with Scotiabank.
[37] Addressing the arguments raised by Ms. McCabe, I am satisfied that the DivorceMate calculation provided by Mr. Sartain’s counsel is an appropriate starting point for determining the quantum of spousal support that would otherwise be payable by Mr. Sartain, as. I find the average income figure used for Mr. Sartain’s income to be appropriate, taking into account the variable nature of his income. I also find that the income figure used for Ms. McCabe, if anything, understates her income potential, since it does not include tips she earned as a server, nor does it take into account her income potential as a bill collector, based on her testimony.
[38] As well, I consider a calculation based on a relationship of five years (rather than six) to be appropriate, although I doubt that factor would make any significant difference to the result. In this regard, I find the evidence to be more consistent with commencement of cohabitation sometime in 2006, rather than in late 2005, consistent with the position taken by both parties in their filings prior to trial.
[39] In addition, for calculation purposes, I agree with the position of Mr. Sartain’s counsel that the lower end of the scale for quantum and duration suggested by the DivorceMate calculation would be appropriate in the circumstances. However, even if the maximum quantum and duration for support payments is used in the calculation, my conclusion that Mr. Sartain would have no liability to pay spousal support would be the same.
[40] In particular, I agree with Mr. Sartain’s counsel that on the evidence before me, Mr. Sartain’s assumption of Ms. McCabe’s obligations under the joint line of credit is more than sufficient, in the circumstances, to offset any amount of spousal support that would otherwise be payable. In this regard, I find that the evidence supports the conclusion that over a five year period, half of the amount of the monthly loan payments required to retire the amount due under the line of credit make would exceed $362, the “high” amount for monthly spousal support payments in the DivorceMate calculations.
[41] In order to provide assurance that Mr. Sartain will make continue to make payments on the line of credit, the final order will require Mr. Sartain to hold Ms. McCabe harmless and indemnify her with respect to her obligations under the joint line of credit and not to make any further withdrawals under that or any other credit line for which the parties are jointly responsible. In the circumstances, I am not able to go further and order Mr. Sartain to remove Ms. McCabe’s name from the line of credit, as requested by Ms. McCabe.
[42] In coming to the conclusion relating to the joint line of credit, I considered Ms. McCabe’s argument that Mr. Sartain should be responsible for all or most of their joint debt, since he was primarily responsible incurring that debt. However, the evidence before me does not support unequal responsibility for incurring the debt in question. That debt was incurred on the joint credit of both parties. There is ample evidence of financial imprudence by both parties, including in their real estate dealings for persons of their means, as previously noted. Is see no sufficient basis for holding one of them more responsible for their financial difficulties than the other.
[43] I also considered Mr. Sartain’s argument that an additional offset would be provided by occupational rent given that Ms. McCabe has lived in the matrimonial home since the separation. While I agree that making an allowance for occupation rent may be appropriate in these circumstances, no evidence was provided that would allow me to determine the amount in this case. In any case, it is unnecessary to determine the amount of occupation rent given the conclusion I have reached relating to the extent of the offset provided by Mr. Sartain’s assumption of responsibility for the joint line of credit.
[44] I also considered Ms. McCabe’s argument that Mr. Sartain has not been paying his fair share of the expenses relating to the matrimonial home pending its sale. In this regard, I agree with Mr. Sartain’s position that he should be responsible for half of the mortgage payments and property tax, but should not be responsible for sharing other expenses, with one exception: the insurance premium for the property. In this regard, I find it appropriate that the property expenses be shared in that way given the circumstances of this case, where Ms. McCabe has lived alone in the jointly owned matrimonial home rent-free for nearly the whole period since separation. I am adding property insurance premiums to the list of shared expenses, since maintenance of adequate insurance coverage is a required by the term of the mortgage. I consider it irresponsible for the parties to fail to maintain property insurance in this case, thereby risking power of sale proceedings. While the position taken by Mr. Sartain on this issue precipitated the current situation of no insurance coverage, in my view, the parties share responsibility for allowing that situation to continue.
[45] In order to clarify the situation relating to shares of property expenses, the final order will state that pending sale of the matrimonial home, Mr. Sartain shall be responsible for 50% of payments relating to (i) the mortgage, (ii) realty taxes, and (iii) premiums for property insurance required by the terms of the mortgage. As well, the order will be require the parties to promptly reinstate property insurance coverage that is required by the terms of the mortgage. If necessary, Mr. Sartain will also be required to promptly pay the full amount of the required premium, with a right of recovery from the Respondent of half of the premium amount.
[46] I am also including a term in the final order that failure by Mr. Sartain to comply in any material respect with the payment requirements of the order shall constitute a material change of circumstances with respect Ms. McCabe’s entitlement to spousal support. This term is intended to permit the issue of spousal support entitlement to be revisited on a subsequent variation motion if there were a material failure by Mr. Sartain to meet the payment obligations under the order.
[47] Such non-payment could result, for example, from a bankruptcy declaration by Mr. Sartain. With certain exceptions, a person who becomes bankrupt is released from liabilities upon discharge from bankruptcy. However, a person being discharged from bankruptcy would continue to be liable for a debt arising from an obligation to pay spousal support, as set out in paragraph 178(1)(c) of the Bankruptcy and Insolvency Act.[^3]
[48] Mr. Sartain is not being ordered to pay spousal support in this case, based on offsetting obligations he is assuming. Should he fail to meet those obligations, it would be appropriate for spousal support entitlement to be revisited. The additional term I have imposed is meant to achieve that end.
IV. Conclusion
[49] Based on the foregoing, a final order will issue in the following terms:
The matrimonial home in Paisley jointly owned by the parties shall continue to be listed for sale. Both parties shall co-operate with the listing and sale of the matrimonial home.
Pending sale of the matrimonial home, the Respondent shall be responsible for half of the following: (a) mortgage payments; (b) realty taxes; and (c) premiums for insurance coverage required by the mortgage. The parties shall promptly reinstate insurance coverage on the matrimonial home that is required by the terms of the mortgage. If necessary to do so, the Applicant shall promptly pay the full amount of the required premium, with a right of recovery from the Respondent of half of the premium amount.
The Applicant shall hold the Respondent harmless and indemnify her with respect to her obligations under their joint line of credit with Scotiabank. The Respondent shall not make any further withdrawals under that or any other credit line for which the parties are jointly responsible.
The parties’ other claims are dismissed, including without limitation their respective claims for division of net family property and the Respondent’s claim for spousal support.
The Respondent’s failure to comply in any material respect with the payment requirements of paragraphs 2 and 3 above shall constitute a material change of circumstances with respect the Respondent’s entitlement to spousal support.
Costs, if demanded and not settled by the parties, will be determined based on written submissions.
[50] The Applicant may serve and file brief written submissions (not to exceed three pages) together with a bill of costs and any pertinent offers within 21 days. The Respondent will have 14 days after receipt of the Applicant’s submissions to respond by brief written submissions. The Applicant may reply by brief written submissions within seven days. All such submissions are to be forwarded to me at my chambers at 59 Church Street, 4th Floor, St. Catharines L2R 7N8. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs.
The Honourable Mr. Justice R.A. Lococo
Released: April 8, 2015
CITATION: Sartain v. McCabe, 2015 ONSC 2198
COURT FILE NO.: 843/12 (St. Catharines)
DATE: 2015/04/08
SUPERIOR COURT OF JUSTICE - ONTARIO
FAMILY COURT
BETWEEN:
Dallas Ernest Sartain
Applicant
- and -
Isabel Marie McCabe
Respondent
REASONS FOR JUDGMENT
R. A. Lococo, J.
Released: April 8, 2015
[^1]: 2014 ONSC 7074, [2014] O.J. No. 5828 (S.C.) at paras. 71-74 [case citations added to text, footnotes otherwise omitted;].
[^2]: 2013 ONSC 2393, [2013] O.J. No. 1849 (S.C.).
[^3]: R.S.C., 1985, c. B-3.