Scozzaro v. Scozzaro, 2015 ONSC 2392

CITATION: Scozzaro v. Scozzaro, 2015 ONSC 2392

COURT FILE NO.: F2021/07

DATE: 2015-04-22

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

LINDA MARIE SCOZZARO Applicant

– and –

THOMAS SCOZZARO Respondent

Linda I. Sapiano, Counsel for the Applicant

Richard P. Startek, Counsel for the Respondent

HEARD: April 8 and 9, 2015

THE HONOURABLE MR. JUSTICE PAZARATZ

[1] This was a long-motion brought by the Respondent husband to terminate spousal support. The Applicant responded with a request for continued spousal support, with an increase retroactively.

BACKGROUND

[2] The background is fairly straightforward:

(a) The Applicant wife is 56.

(b) The Respondent husband is 59.

(c) The parties were married May 12, 1979.

(d) They separated May 31, 2002 at which time their two children were ages 16 and 14. Both children are now independent.

(e) They were divorced in 2009.

2002 SEPARATION AGREEMENT

[3] Within months of separation, on August 20, 2002 the parties entered into a comprehensive separation agreement at a time when both were represented by counsel. The agreement included the following terms relating to the children:

(a) Joint custody.

(b) Primary residence of the oldest child with the husband.

(c) Residence of the younger child divided equally between the parties.

(d) Husband to pay child support in the sum of $500.00 per month.

(e) At the time the husband’s employment income was approximately $60,000.00.

(f) The wife was off work, receiving approximately $27,259.00 from disability and pension payments.

[4] The agreement included the following provisions regarding spousal support:

(a) There was to be no spousal support owing by either party to the other “at this time”.

(b) The parties “expect and anticipate” that the wife shall use her best efforts to become financially self-sufficient.

(c) In the event the wife is determined to be entitled to spousal support at some time in the future, the husband shall be entitled to request a review of spousal support on or after September 5, 2006, without first having to establish a change in circumstances.

[5] Paragraph 10.5 of the agreement specified that any entitlement of the wife to spousal support shall terminate upon the earliest of the happening of the following events:

(a) The wife cohabits in a relationship or relationships resembling marriage for one or more periods totalling six months.

(b) The wife remarries.

(c) The husband retires from full-time employment.

(d) The wife dies; or

(e) The husband dies.

[6] As part of the property settlement the husband transferred the matrimonial home to the wife. She paid him $106,700.00 identified as an equalization payment.

2008 FINAL ORDER

[7] On November 15, 2007 the wife filed an Application including a request for spousal support. Again both parties retained counsel who negotiated a settlement which came to be incorporated in the final order of Justice McLaren dated November 19, 2008. That order – the subject of this motion to change – included the following terms:

(a) No further child support payable.

(b) Respondent husband to pay to Applicant wife $1,200.00 spousal support commencing October 1, 2008.

(c) Spousal support payments to be taxable for Applicant; tax deductible for Respondent.

(d) Rental income received by either party not to be considered income for purposes of any variation of spousal support.

(e) Cohabitation with a new partner also not to be considered for purposes of any variation of spousal support.

(f) Respondent to rollover $10,000.00 in RRSP’s to satisfy arrears of spousal support.

(g) Respondent also to pay Applicant $124.00 per month as his contribution toward her health related expenses, continuing until she can be maintained under a new partner’s health care plan, or until the Applicant is 65, whichever is earlier.

(h) Respondent to designate Applicant as beneficiary of a life insurance policy for a specified period of time.

[8] Notably, the consent order did not set out the parties’ respective income levels which formed the basis of the open-ended $1,200.00 monthly payments.

(a) Counsel agreed disclosure available at the time would suggest the Applicant’s income was approximately $35,000.00 and the Respondent’s income was represented as $78,000.00.

(b) As it turns out, the Respondent’s 2008 income totalled $99,000.00. However the Applicant is not seeking an adjustment in relation to 2008, as it is clear that her lawyer at the time was aware 2008’s total was going to be unusually high.

[9] The parties’ current lawyers were not involved in 2008. Neither provided any explanation as to how the $1,200.00 spousal quantum was calculated.

(a) The parties’ financial statements at the time were not referred to on this motion.

(b) A 2015 Divorcemate calculation was presented for information purposes. It set out that the Spousal Support Advisory Guideline (“SSAG”) numbers for the 2008 income levels would have been $1,241.00 low; $1,448.00 mid; and $1,644.00 high end of the range. Counsel speculated that $1,200.00 might have loosely correlated to the low end of the SSAG range.

(c) But they weren’t sure.

[10] The November 19, 2008 order arose at a transitional point in the lives of both parties:

(a) When the 2002 separation agreement was signed the Respondent was working. The Applicant was off work as a result of illness, but hoping to eventually return to work.

(b) As it happens, after 2002 both parties developed medical problems. The Applicant was never able to return to the workforce. The Respondent continued to work, but one of the issues briefly raised on this motion was whether the Respondent is capable of working as a result of his medical problems.

(c) Just before the November 19, 2008 consent order the Respondent was involuntarily terminated from his longstanding employment with a local appliance manufacturer as a result of corporate reorganization.

(d) When the consent order was agreed upon, the Respondent had been advised that he would be receiving wage continuation in the form of ongoing severance payments from October 3, 2008 to May 2010. There was provision that those ongoing severance payments would be reduced if the Respondent obtained other employment income prior to May 2010.

(e) Upon severance payments ending in May 2010, the Respondent would then start receiving his monthly pension from his former employment.

RESPONDENT’S EMPLOYMENT

[11] Within months of the November 19, 2008 spousal support order the Respondent found a new job with an appliance retailer:

(a) On April 18, 2009 he started part time.

(b) On March 29, 2010 he started full time.

(c) On April 10, 2014 he resigned his employment, citing health and other reasons.

(d) He has not held employment since then, and says he has no intention (or ability) to do so.

(e) He unilaterally stopped paying support as of April 2014.

[12] This employment – and the income generated by the Respondent – commanded considerable attention in this motion

(a) The Applicant argued this income amounted to an unanticipated – and undisclosed – increase in the Respondent’s financial circumstances and ability to pay.

(b) She said the November 19, 2008 order was based upon the Respondent’s representation that he was unemployed and that he would be solely reliant on his severance package, followed by his monthly pension.

(c) She said the Respondent never disclosed his extra income, or even the fact that he had found replacement employment.

(d) She said he also failed to disclose that he subsequently started living with a new partner. She noted that even in his financial statement sworn March 13, 2015 the Respondent made no mention of living with or sharing expenses with a new partner.

(e) As well, she noted that even though the Respondent had represented that his severance payments would be reduced if he generated replacement employment income, as it turns out his severance payments apparently were not reduced.

(f) She said even after the Respondent commenced this motion to change on March 19, 2014, he still refused to disclose his income. When he was finally ordered to do so, she discovered that for each year since the 2008 order the Respondent’s income was higher than he had previously represented.

[13] The Respondent countered:

(a) While the 2002 separation agreement required an annual exchange of financial disclosure, the 2008 order included no such requirement.

(b) Neither he nor the Applicant made ongoing financial disclosure because neither of them thought they had to.

(c) However, he is confident the Applicant had some idea the Respondent had found employment because he told their adult sons, and he’s quite sure they would have told their mother. He feels she knew he was working and she simply elected not to follow up or inquire about his income.

(d) The Applicant denied receiving any such information from their sons.

[14] The parties agreed the Applicant’s income hasn’t really changed since the 2008 order. Her need hasn’t changed. The focus on this motion was entirely on changes in the Respondent’s ability to pay.

[15] To put things in perspective, compared to his $78,000.00 income when the 2008 consent order was made:

(a) In 2009 he earned $105,706.00, from severance and employment income.

(b) In 2010 he earned $100,879.41 (of which $17,298.33 was pension income).

(c) In 2011 he earned $115,336.72 (of which $29,654.28 was pension income).

(d) In 2012 he earned $111,202.77 (of which $29,654.28 was pension income).

(e) In 2013 he earned $105,989.73 (of which $29,654.28 was pension income).

(f) In 2014 he earned $76,660.62 (of which $29,654.28 was pension income).

(g) In 2015 he says his only income will be the $29,645.28 pension income.

[16] On the issue of disclosure:

(a) I accept the Applicant’s evidence that the Respondent did not disclose his improved financial circumstances.

(b) I reject the Respondent’s very general speculation that the parties’ adult children must have told the Applicant that he was working.

(c) In any event, there is no suggestion that even if at some point the Applicant indirectly heard the Respondent might be working, that she actually received any details as to the nature of his employment or his income. She never received sufficient information to justify the suggestion that she should have acted sooner.

(d) The Applicant’s submission that the Respondent did not disclose his higher income over five successive years is bolstered by the fact that even after he commenced this motion to change, the Respondent still didn’t disclose his income. The Applicant only learned of the significant increases in the Respondent’s income after she obtained a disclosure order dated June 11, 2014.

[17] I reject the Respondent’s submission that he had no obligation to make disclosure after 2008.

(a) From both the 2002 separation agreement and the 2008 court proceedings, the Respondent would have been aware that his employment status and income were vitally relevant to the issue of spousal support.

(b) The November 19, 2008 order was based upon the Respondent’s representation that he was unemployed, and that his income was scheduled to decrease by 2010. Instead he found employment within a few months, and his income increased by as much as 35% for about five years in a row.

(c) It would be unfair to allow a payor in these circumstances to benefit from withholding information which would obviously have been relevant to the support analysis.

(d) The Respondent had no hesitation to bring this motion to terminate spousal support after electing to quit his job. He can’t selectively disclose changes when they help his case, but conceal changes which might expose him to increased support payments.

RESPONDENT’S PENSION

[18] While the Respondent acknowledges that his overall annual income was consistently higher after the 2008 order, he argued that about $29,000.00 of annual pension income should be excluded from the spousal support analysis, because it would amount to double-dipping. The Applicant denies that double-dipping applies. She asks that the Respondent’s entire income be considered for support purposes:

(a) Both parties agree the August 2002 equalization calculation was based upon the Respondent’s pension being valued at $35,942.00.

(b) More precisely, the pension was valued based upon the Respondent starting to receive monthly payments on November 1, 2018 at age 63.

(c) The Respondent submits his entire pension income is untouchable for spousal support purposes, because the Applicant already received her share of the pension when equalization was determined.

(d) The Applicant counters that with the Respondent’s pension going into pay in May 2010 as opposed to November 2018, he will be receiving eight years of pension payments which have never been equalized.

(e) In addition the pension valuation used in the equalization calculation did not include the Respondent’s pre-marriage accumulation of pension entitlements; nor did it include the Respondent’s post-separation growth in his pension (between 2002 and 2010 when the pension went into pay).

(f) The Applicant argues the Respondent wants it both ways: He valued his pension based on retirement at 63. But after he started receiving his pension eight years early, he claimed he always intended to retire at “Freedom 55”.

[19] I agree with the Respondent’s counsel that it is generally unfair to allow a payee spouse to reap the benefit of a payor’s pension both as an asset (for equalization purposes) and then again as a source of income. (Boston v. Boston (2001) 2001 SCC 43, 17 R.F.L. (5th) 4, S.C.C.); Hickey v. Princ 2014 ONSC 5272 (SCJ)).

[20] But the mere fact that some Respondent’s pension was a component of the 2002 equalization calculation, does not mean that the Respondent’s entire pension income is now irrelevant (or untouchable, as the Respondent suggests).

[21] To avoid double recovery, the court must determine which portion of the current pension income has already been shared through equalization, and which portion relates to growth in the pension asset which was not included in the equalization analysis.

[22] The court requires evidence and the onus is on the payor to establish how much of his or her total income should be excluded from consideration, to avoid double dipping.

[23] In a recent decision Slongo v. Slongo 2015 ONSC 2093, Lemon J. dealt with a similar issue:

(a) A payor husband retired earlier than anticipated when equalization was calculated.

(b) He then supplemented his early pension income by obtaining new employment.

(c) An issue arose as to the extent to which the pension income amounted to double dipping; or in any event how much could be considered for spousal support purposes.

(d) At paragraph 74 the court noted: “Since his pension is now expected to pay him for 10 years longer than was expected at the time of separation, its value, for that reason, along with others represents a much larger value than was agreed upon.”

(e) The court was presented with expert evidence on the threshold issue of how much of the current pension income which had already been shared through equalization.

[24] Unfortunately, in this case the Respondent provided no evidence whatsoever as to:

(a) How much of his pension income relates to growth in the pension prior to marriage.

(b) How much of his pension income relates to growth in the pension following separation.

(c) What extra financial benefit the Respondent has experienced by virtue of his pension going into pay in 2010 as opposed to his previously represented date of 2018.

[25] There is no absolute prohibition against double-dipping. (Boston, supra). It is to be avoided where it is possible and fair to do so. But exceptions to this general rule apply where unforeseen early retirement results in earlier pension income than had been anticipated; or where the retiree derived other pension entitlements which were never equalized. (Meiklejohn v. Meiklejohn (2001) 2001 21220 (ON CA), 19 R.F.L. (5th) 167 (Ont. C.A.); Dishman v. Dishman 2010 ONSC 5239 (SCJ)).

[26] In all the circumstances, and particularly having regard to the fact that both parties appear to acknowledge that there will be no current ability to pay with respect to ongoing spousal support, I am not prepared to reduce or disregard any of the Respondent’s pension income in relation to the retroactive support analysis.

RESPONDENT’S INCREASED INCOME

[27] The Respondent also argued the Applicant should not be allowed to benefit from his post-separation increase in income. In Thompson v. Thompson 2013 ONSC 5500 (SCJ) Chappel J. provided a helpful summary of the law on this issue:

[103] The authors of the SSAG and the cases decided since the guidelines were introduced have established that the treatment of post-separation increases in a payor’s earnings in spousal support cases is ultimately a matter of discretion for the court, to be undertaken having regard for the unique circumstances of each case and the general factors and objectives underlying spousal support. Upon considering these factors and objectives and the relevant case-law, I conclude that the following general principles should guide and inform the court’s exercise of discretion on this issue:

a. A spouse is not automatically entitled to increased spousal support when a spouse’s post–separation income increases.

b. The right to share in post-separation income increases does not typically arise in cases involving non-compensatory claims, since the primary focus of such claims is the standard of living enjoyed during the relationship.

c. Compensatory support claims may provide a foundation for entitlement to share in post-separation income increases in certain circumstances. The strength of the compensatory claim and the nature of the recipient’s contributions appear to be the major factors which may tip the balance either for or against an entitlement to share in the increased income.

d. The recipient spouse may be permitted to share in post-separation increases in earnings if they can demonstrate that they made contributions that can be directly linked to the payor’s post-separation success. The nature of the contributions does not have to be explicit, such as contribution to the payor’s education or training. The question of whether the contributions made by the recipient specifically influenced the payor’s post-separation success will depend on the unique facts of every case.

e. A spousal support award is more likely to take into account post-separation income increases where the relationship was long-term, the parties’ personal and financial affairs became completely integrated during the course of the marriage and the recipient’s sacrifices and contributions for the sake of the family and resulting benefits to the payor have been longstanding and significant. When this type of long history of contribution and sacrifice by a recipient spouse exists, the court will be more likely to find a connection between the recipient spouse’s role in the relationship and the payor’s ability to achieve higher earnings following the separation.

f. In determining whether the contributions of the recipient were sufficient, the court should consider such factors as whether the parties divided their family responsibilities in a manner that indicated they were making a joint investment in one career, and whether there was a temporal link between the marriage and the income increase with no intervening change in the payor’s career.

g. If the skills and credentials that led to the post-separation income increase were obtained and developed during the relationship while the recipient spouse was subordinating their career for the sake of the family, there is a greater likelihood of the recipient deriving the benefit of post-separation income increases.

h. By contrast, the likelihood of sharing in such increases lessens if the evidence indicates that the payor spouse acquired and developed the skills and credentials that led to the increase in income during the post-separation period, or if the income increase is related to an event that occurred during the post separation period.

i. Assuming primary responsibility for child care and household duties, without any evidence of having sacrificed personal educational or career plans, will likely not be sufficient to ground an entitlement to benefit from post-separation income increases.

j. Evidence that the post-separation income increase has evolved as a result of a different type of job acquired post-separation, a reorganization of the payor’s employment arrangement with new responsibilities, or that the increase is a result of significant lifestyle changes which the payor has made since the separation may militate against a finding that the recipient should share in the increase.

k. Where the payor’s post-separation advancement is related primarily to luck or connections which they made on his own, rather than on contributions from the recipient, the claim for a share in post-separation income increases will be more difficult.

l. The court may also consider the amount of time that has elapsed since separation as an indicator of whether the recipient’s contributions during the marriage are causally related to the post–separation income increases.

m. Evidence that the payor also made contributions to the recipient’s career advancement, or that the recipient has not made reasonable steps towards achieving self-sufficiency are also factors that may preclude an award that takes into account post separation income increases.

[28] The Applicant argues this is not really a “post separation increase in income” case.

(a) During the relationship the Respondent was steadily employed with an appliance manufacturer.

(b) After separation, between 2002 and 2008 he continued in the same position, with approximately the same income.

(c) He lost that job.

(d) He then found a new job to replace the income lost from his previous job.

(e) The income from the replacement job was generally similar to the income from the original long-term position.

(f) In the Applicant’s view that’s not a “post-separation increase”. That’s simply replacement income.

[29] In any event, the Applicant submits there is a significant compensatory support component to her support entitlement, which – combined with all of the considerations under s. 17(7) of the Divorce Act – warrant inclusion of all of the Respondent’s income in the support analysis.

[30] I accept the Applicant’s position:

(a) Based on the evidence submitted on this motion to change, the history and profile of this family would suggest a compensatory component to the Applicant’s entitlement to support.

(b) The Respondent’s post-separation employment and income path is entirely consistent with the roles, skill sets, and viability in the employment marketplace which he developed during the lengthy period of cohabitation.

(c) If his factory hadn’t closed, he would have continued at his same job with his same income (subject to incremental pay increases).

(d) After his factory closed he found similarly remunerative employment also in the appliance field (although in retail, as opposed to manufacturing).

[31] Difficult and evolving economic conditions are forcing more employees to change jobs and reorganize their lives, even late in life.

(a) Invariably this will entail a series of ups and downs in income levels.

(b) Anomalies will arise in certain years or during certain periods when income from previous employment (a severance package or early pension) overlaps with income from a replacement job (or jobs).

(c) Where the payor spouse is better equipped to weather unexpected career disruptions by virtue of credentials and employment experience which arose during the marriage, the mere fact of having been forced to change employers should not insulate the subsequent income stream from the spousal support analysis.

(d) In this case, even if the Respondent’s entire post-separation income is included in the spousal support analysis, both parties will still have difficulty matching the modest lifestyle they experienced during cohabitation.

[32] Having said that, in this case the ambiguities in the 2002 separation agreement and the 2008 order are a reminder of the benefits of:

(a) Specifying income levels and any other relevant circumstances when consenting to a final spousal support order.

(b) Identifying, if possible, whether entitlement to spousal support was based on compensatory; non-compensatory; and/or contractual factors.

[33] I have also considered the net worth and overall financial circumstances of the parties:

(a) In 2008 the Applicant’s net worth was $375,441.00; the Respondent’s was $331,216.00.

(b) Currently, the Applicant’s net worth is $635,582.00; the Respondent’s is $600,517.87 (not including his accumulated pension).

(c) They are in similar circumstances with respect to assets, which is appropriate given that they are of similar ages, and this was a 23 year relationship.

(d) They will both face the same challenges and options with respect to utilizing and likely encroaching on their assets in the future.

RESPONDENT’S RETIREMENT

[34] As stated, on April 10, 2014 the Respondent resigned from the retail position he started in 2009, citing health and other reasons.

[35] The Respondent’s counsel argued that this decision to retire terminates ongoing and future spousal support by virtue of s. 10.5(c) of the August 20, 2002 separation agreement which read in part:

“…Any entitlement of the wife to spousal support shall terminate upon the earliest of the happening of the following events…(including)…the husband retires from full-time employment.”

[36] The Respondent’s position: He retired in April 2014. That ends the Applicant’s entitlement forever.

[37] I do not accept that analysis and agree with the Applicant on a number of points:

(a) The November 19, 2008 consent final order was based upon a signed settlement document whose preamble very specifically identified that sections 9 and 10 of the separation agreement were being varied. I find that this includes variation of s. 10(5)(c).

(b) Spousal support was ordered on an indefinite basis.

(c) The 2002 separation agreement may well have been a relevant consideration when the matter came to court in the first instance in 2008. But once the spousal support provisions of the 2002 separation agreement were considered and specifically changed in the 2008 court order – that order supersedes the earlier contractual provisions.

(d) The November 2008 order included a number of specific terms as to what income and circumstances would or would not be relevant on any variation of spousal support. But the Respondent’s right to simply terminate spousal support by unilaterally retiring was not preserved in the 2008 order.

(e) In 2002 the Respondent was a long term employee with an appliance manufacturer. Retiring from full-time employment referred to leaving that manufacturing position. Indeed, by the time the November 2008 order was pronounced, the Respondent had already left that job as a result of a permanent layoff. He was already retired from that full time position when the spousal support order commenced.

[38] The Respondent’s attempt to rely on a 2002 separation agreement on this motion to change a 2008 final support order must be considered within the context of the applicable provisions of the Divorce Act. As noted in L.M.P. V. L.S. 2011 SCC 64 (S.C.C.):

(a) There are differences between what a court is directed to consider in making an initial support order and on a variation of that order.

(b) Unlike on an initial application for spousal support under s. 15.2(4)(c), which specifically directs that a court consider “any order, agreement or arrangement relating to support of either spouse”, s. 17(4.1) makes no reference to agreements and simply requires that a court be satisfied “that a change in the condition, means, needs or other circumstances of either former spouse has occurred” since the making of the prior order or the last variation of that order.

(c) Because of these differences in language, it is important to keep the s. 15.2 and s. 17 analyses distinct.

[39] To a large extent the Respondent’s argument that the separation agreement gave him the option to end spousal support by retiring is academic, because the reality is that I accept the Respondent’s evidence that:

(a) He retired for valid reasons, having regard to his age and health. As stated, both of these parties have significant health problems.

(b) After retiring from his retail position in April 2014, his pension income alone does not provide any current ability to pay spousal support. Reluctantly, Applicant’s counsel seemed to acknowledge this. That’s why the focus of the motion was on the retroactive support claim.

[40] But I agree with the Applicant’s counsel that the Respondent cannot try to dredge up section 10(5)(c) of the 2002 separation agreement, to argue that now that he has (for the second time) retired from full time employment, the Applicant’s entitlement to spousal support has permanently ended.

(a) The Applicant’s circumstances have not improved since 2008. If anything, her annual income has dropped slightly. And as her health has deteriorated, her medical expenses (and pending future dental expenses) have actually increased.

(b) I am not prepared to impute income to the Respondent because I accept his representations that for medical reasons he can’t work.

(c) I accept that currently he has no ability to pay.

(d) But based on the Respondent’s own evidence, after being laid off from his long term manufacturing position in 2008, in 2009 he became bored and elected to return to the workforce despite his personal circumstances. Initially he worked part-time in retail. Eventually he took on full time employment.

(e) If by any chance the Respondent again chooses to return to the workforce, and if the then existing financial circumstances of the parties would otherwise warrant spousal support, I find that section 10(5(c) of the 2002 separation agreement is not a bar to a future spousal support application by the Applicant.

RETROACTIVITY

[41] The Respondent disputes that any retroactive support adjustment is appropriate. Beyond that, a separate issue arose as to the appropriate commencement date for a support adjustment, if retroactive support is ordered.

(a) The Respondent argued no retroactive adjustment should be considered earlier than 2011, “based on the three year considerations” set out in relation to retroactive child support. (D.B.S. v. S.R.G., 2006 SCC 37 (S.C.C.)).

(b) The Applicant requested that the retroactive adjustment go back to 2009, because as of that year the Respondent knew he was working and earning significantly more income than he had disclosed.

(c) In the Applicant’s view, the Respondent is already getting the benefit of having his 2008 support obligation based on his stated income of $78,000.00 rather than the $99,000.00 which was eventually revealed.

[42] The commencement date for spousal support is discretionary. (Kerr v. Baranow, 2011 SCC 10 (S.C.C.)); MacKinnon v. MacKinnon (2005), 2005 13191 (ON CA), 75 O.R. (3d) 175 (Ont.C.A.)). In assessing a claim for spousal support prior to the commencement of the proceeding, the court may consider:

(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.

(i) (See Bremer v. Bremer, 2005 3938 (ON CA), [2005] O.J. No. 608 (Ont. C.A.); Marinangeli v. Marinangeli, (2003), 2003 27673 (ON CA), 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.)).

[43] I agree with the Applicant that the circumstances of this case warrant consideration of a spousal support adjustment back to January 1, 2009.

(a) The Applicant’s entitlement to spousal support had been clearly established.

(b) There was an existing indefinite spousal support order, with quantum based on very specific representations as to the Respondent’s limited (and declining) financial circumstances.

(c) Both in relation to the 2002 separation agreement and the 2008 consent order, the Respondent appeared to be meticulously attentive to the relevant considerations relating to all aspects of spousal support.

(d) The Respondent was aware quantum of support was based on his income. He knew his income had gone up. He knew the Applicant’s comparative financial circumstances were unfavourable, with little prospect of improving. He knew disclosure of his unexpected employment and increased income would expose him to increased support payments.

[44] It is trite law to say that full, candid and timely financial disclosure is fundamental to the family court process. But ongoing experience in motions court suggests it is a statement that bears repeating. We do a disservice to parties and we do a disservice to our judicial system if we allow or tolerate a perception that payors can benefit from failing to disclose income.

MATERIAL CHANGE

[45] On this motion to change, counsel agreed “material change in circumstances” is the test. (Willick v. Willick (1994) 6. R.F.L. (4th) 161 (S.C.C.)) But they disagreed as to how that test should be applied.

[46] The Applicant’s counsel argued there was a material change in circumstances during the period 2009 to 2013 justifying an increase in spousal support; but she said there was no material change in circumstances thereafter justifying the Respondent’s request for a decrease in spousal support. Her rationale:

(a) The November 19, 2008 order required spousal support in the sum of $1,200.00 per month on an indefinite basis.

(b) It was known at the time that the Respondent had lost his job; he would be receiving severance pay until May 2010; and thereafter he would be reliant on only his pension income.

(c) As it happens, he found a replacement job so his income went up during the years 2009 to 2013. That justifies increasing support during those years.

(d) But the Applicant’s counsel argued that as of 2014 the Respondent’s situation was the same as had been anticipated in 2008. So there was no material change in circumstances justifying a decrease below $1,200.00 per month.

[47] The Applicant’s submission that “support can never go below $1,200.00 per month” is unrealistic.

(a) The November 2008 indefinite support order was based on the Respondent having a significant income of approximately $78,000.00 through ongoing severance payments until May 2010.

(b) At that point severance payments would terminate. The Respondent’s pension would go into pay. His new income as of May 2010 appears not to have been specifically addressed. But it was clear that if nothing else changed, there would be a dramatic reduction in the Respondent’s income as of May 2010.

(c) The Applicant correctly argues that a material change in circumstances should be a development or new factual situation which was not foreseeable when the original order was made.

(d) Here, it may well have been foreseeable that the Respondent’s $78,000.00 income was only expected to continue another year and a half from the date of the order. It was also foreseeable that thereafter his income would be reduced.

(e) But apart from these generalities, it appears neither of these parties did very much “foreseeing”. They didn’t clearly specify 2008 income levels. There’s no evidence that they even speculated about how much income the Respondent was eventually going to have.

(f) The Applicant’s lawyer was unable to explain how it would be logical – or affordable – that the Respondent should pay $1,200.00 per month spousal support when he was earning $78,000.00 per year – and then continue to pay $1,200.00 per month indefinitely even after his income dropped by more than 50%.

[48] I find that neither of these parties specifically contemplated the exact financial circumstances the Respondent now faces.

(a) His only income is $29,645.00 per year from his pension.

(b) The Applicant’s counsel notes that the Respondent should soon be eligible for Canada Pension income. She also suggests based on his health he may also be eligible for CPP sick benefits.

(c) If in the future he receives those -- or other – additional funds, once again that may constitute a material change in circumstances justifying yet another redetermination of spousal support.

(d) In the meantime, I find that the Respondent has no current ability to pay spousal support (even though entitlement and need have not been diminished).

[49] That gets us back to retroactive support.

(a) As stated, I agree with Applicant’s counsel that there has been a material change in circumstances warranting a retroactive increase.

(b) I agree retroactivity should go back to 2009 when the Respondent experienced a significant increase and didn’t reveal it.

(c) I find the Applicant has suffered financial hardship as a result of receiving less financial support than she needed – and less than the Respondent could afford to pay.

(d) And I find the Respondent has adequate resources to satisfy a retroactive payment, without incurring significant hardship.

[50] The issue then became how retroactive support is to be calculated.

[51] The Spousal Support Advisory Guidelines are not binding but are a useful tool and are to be considered in addressing quantum. (Fisher v. Fisher (2008), 2008 ONCA 11, 47 R.F.L. (6th) 235 (Ont. C.A.)). The Guidelines are also relevant and of assistance on variation applications. (Gray v. Gray 2014 ONCA 659 (Ont. C.A.)).

[52] However, the Applicant’s calculations appear to presume that in dealing with a retroactive variation we should simply run the Divorcemate program for each year since 2009, and tally up the “mid-point” support number for each year. That approach is neither satisfactory, fair, nor contemplated by the Guidelines.

(a) As it happens, the original $1,200.00 monthly support order was slightly below the low end of the SSAG calculation prepared in 2015 – even though it is completely unclear whether this was by design in 2008 or by coincidence.

(b) However the $1,200.00 was calculated, any increase in spousal support should relate directly to the increase in income. A material change does not trigger a de novo consideration.

(c) There should be a specific correlation between the nature and extent of the changed circumstance (in this case, the increased ability to pay), and the changed support obligation. (L.M.P. V. L.S., supra); Pustai v. Pustai 2014 ONCA 422 (Ont. C.A.)).

(d) By way of example, the Applicant’s request for “mid-point support” for 2009 would mean that with $27,000.00 of additional income, the Respondent would have to pay an additional $18,984.00 of spousal support in that year. That couldn’t possibly make sense, and it cries out for a more realistic approach to correlating increased ability to pay with increased support payments.

(e) There is no presumption that the mid-point SSAG figure automatically prevails when support is determined in the first instance. Such a presumption would be even less appropriate on a motion to change.

[53] The Respondent submits that if the “low” number on the SSAG range was used in the original order, for the sake of consistency the low number should be used on a motion to change. The Applicant disagrees.

(a) As stated, whether in the first instance or on a variation, there is no presumption that any particular point on the SSAG range should prevail.

(b) Similarly, if the low, mid, or high SSAG number was used in an original support order, it does not automatically follow that the same spot within the SSAG range must apply on a variation.

(c) The practical problem for Judges is that parties focus almost entirely on income levels and the corresponding Divorcemate print-outs.

(d) Here – as in most cases – there was little discussion of actual budgets; the nature of the support entitlement; division of property; debt loads; standards of living; duration; or restructuring.

(e) In the absence of other evidence or considerations, if the increase in support is proportionate to the increase in the payor’s income, we may coincidentally end up in approximately the same position on the SSAG ranges.

[54] Without acknowledging that any retroactive support was appropriate, the Respondent’s counsel submitted the following summary of SSAG ranges for the years in question:

(a) 2009: $1,987 - $2,318 - $2,649

(b) 2010: $1,351 – $1,576 - $1,801

(c) 2011: $1,411 - $1,646 - $1,881

(d) 2012: $1,292 - $1,508 - $1,718

(e) 2013: $1,142 - $1,333 - $1,501.

[55] The Applicant’s counsel generally agreed with those figures, subject to some minor overstatement of the Applicant’s income which might slightly increase the numbers.

[56] Serious errors can occur when one simplistically applies the Divorcemate calculations to determine spousal support. “The Guidelines are a binder of information, not simply a computer software calculator.” (Slongo supra) It is impossible to be mathematically precise, particularly dealing with retroactive spousal support over a number of years

[57] Among my considerations in determining this motion:

(a) Instead of $1,200.00 the Respondent should have paid the following monthly amounts: $2,100.00 in 2009; $1,500.00 in 2010; $1,450.00 in 2011; $1.400.00 in 2012; and $1,300 in 2013.

(b) Even though the Respondent quit his job (and stopped paying support) in April 2014, in that year his total income was $76,660.00 – almost the same as his declared 2008 income. So he should have paid $1,200.00 per month for the whole year.

(c) As of 2015 the Respondent’s $29,645.28 pension income would not be enough to warrant any spousal support payment.

(d) The Applicant should be entitled to prejudgment interest on unpaid support.

(e) Beyond that, subject to any further changed circumstances, this will likely be the last spousal support adjustment between the parties.

(f) I must consider that the Applicant had absolutely no control over the duration of spousal support whereas the Respondent, arguably, had some control. He has health problems, but nothing acute arose at the precise moment he decided to stop work. He didn’t advise the Applicant he was working. He didn’t forewarn her he would stop working and suddenly terminate her support payments. He simply took the position that he had health problems and he had worked long enough.

(g) In assessing support globally I must consider the impact on the Applicant of suddenly and unexpectedly having her cash flow significantly and permanently altered. In long-term marriages spousal support should promote a rough equivalency of the standards of living of the former spouses. (Moge v. Moge 1992 25 (SCC), 43 R.F.L. (3d) 345(S.C.C.)).

[58] In the circumstances, I find that the appropriate retroactive spousal support payment totals $34,000.00.

[59] The Applicant proposed the Respondent could satisfy any retroactive support obligation by way of a tax free RRSP rollover. The Respondent was non-committal about this option, but acknowledged he has sufficient RRSP’s to fund any retroactive order.

[60] Counsel agreed that apart from RRSP rollover option, any retroactive payment will have to be netted down to reflect the fact that the Respondent will not get a deduction, and the Applicant won’t have to pay tax on the sum. Fortunately counsel agreed the reduction should be 20%.

[61] They also agreed that paragraph 8 of the November 19, 2008 order is to continue, requiring the Respondent to pay to the Applicant $124.00 per month until age 65 as a contribution toward her health related expenses.

[62] In many ways this case is analogous to the facts in Ellis v. Ellis 2010 ONSC 1880 (SCJ):

(a) A 22 year marriage.

(b) A final consent order requiring $2,233.00 per month spousal support on an indefinite basis.

(c) Order contained no disclosure requirement.

(d) Payor husband subsequently bringing motion to decrease spousal support.

(e) Payor then revealing that during intervening period he had experienced a significant increase in income which was never disclosed.

(f) Until recipient received request for reduction of support she had no information as to the payor’s change in circumstances, and no reason to believe there had been a material change in his income.

(g) At paragraph 22 the court summarized: “If Mr. Ellis is seeking to reduce his support obligation, then it is only fair that the court examine and adjust support for the entire period that his income was in flux…that any temporary increase in his income…be considered, as well as any decrease upon which he is seeking to reduce the amount of support on a permanent basis.”

(h) The payor succeeded in reducing ongoing support.

(i) But retroactive spousal support was ordered calculated on an annual basis, and netted down to $26,972.21 to reflect loss of tax deductibility.

THE ORDER

1. The Respondent shall pay to the Applicant the sum of $34,000.00 (inclusive of interest) as retroactive spousal support for the period January 1, 2009 to December 31, 2014.

2. At the Respondent’s option, he may satisfy this obligation by:

(a) Transferring to the Applicant $34,000.00 of RRSP’s by way of a tax free spousal rollover no later than June 1, 2015 (subject to this option being available pursuant to the Income Tax Act), or

(b) Paying to the Applicant the “netted down” sum of $27,200.00 no later than June 1, 2015 (in which event neither party would be entitled or required to reference this payment on their tax returns).

3. The Respondent shall pay to the Applicant the sum of $124.00 per month as his contribution toward all of her health related expenses (medical, dental, etc.), commencing October 1, 2008 and continuing until the Applicant can be maintained under a new partner’s health care plan or until the Applicant is 65, whichever is earlier.

4. Commencing January 1, 2015 the Respondent’s spousal support payments shall be reduced to $0, based on his lack of any ability to pay. However, there has been no determination that the Applicant’s entitlement to spousal support has been terminated.

5. Each party shall notify the other in writing immediately if they come to be entitled to any new or increased funds such as Canada Pension Benefits, CPP sick benefits, or employment income.

6. Each party shall provide the other with a copies of their tax returns (as filed) and their notices of assessment (as received from Canada Revenue Agency) annually by June 30 (commencing June 30, 2015).

7. Support Deduction Order to issue.

8. If the parties wish to address any clarifications or issues (other than costs), they should arrange through the trial co-ordinator a date for this matter to be spoken to in court.

9. If only costs remain to be addressed, counsel should file written submissions on the following timelines:

(a) The party seeking costs should serve and file written submissions within 21 days (if both parties seek costs, the Applicant should go first).

(b) The responding party should serve and file submissions within 15 days thereafter.

(c) Any reply submissions should be served and filed within 7 days thereafter.

(d) These deadlines may not be extended without court order.

Pazaratz, J.

Released: April 22, 2015