CITATION: Pascall v. Mbolekwa, 2015 ONSC 7444

COURT FILE NO.: FS3388-13

DATE: 2015/12/01

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: REBECCA ANN PASCALL v. MZIWOXOLO TEBOGO MBOLEKWA

BEFORE: Ellies J.

COUNSEL: Rebecca Ann Pascall, acting in person

Shawn Hamilton, for the respondent

HEARD: November 27, 2015

ENDORSEMENT

[1] In the motion at tab 16 of the continuing record, Mr. Mbolekwa seeks a final order terminating child support with respect to Olivia and an order reducing the amount of spousal support he is presently paying to Ms. Pascall, among other things.

[2] Mr. Mbolekwa relies on the terms of a separation agreement he entered into with Ms. Pascall (formerly Mrs. Mbolekwa) in 2006. With respect to child support, he relies on a clause which provides for the termination of support on the earlier of a number of triggering events. With respect to spousal support, Mr. Mbolekwa relies on a material change in circumstances, namely his retirement.

[3] Representing herself, Ms. Pascall concedes that Mr. Mbolekwa is no longer required to pay child support pursuant to the separation agreement. However, she argues strenuously that she continues to need spousal support and that Mr. Mbolekwa continues to be able to pay it.

[4] For the following reasons, a temporary order shall issue terminating Mr. Mbolekwa’s child support obligations and varying Mr. Mbolekwa’s spousal support obligations such that, effective November 1, 2015 he shall be required to pay spousal support in the amount of $1,300 per month. Effective April 1, 2016, he shall be required to pay spousal support in the amount of $550 per month. Effective September 1, 2016, he shall be required to pay spousal support in the amount of $400 per month.

ISSUES

[5] This motion raises two issues:

(1) Should Mr. Mbolekwa’s child support and spousal support obligations be varied and, if so, to what extent?

(2) Should any variation be temporary or final?

ANALYSIS

Issue 1: Should the child and spousal support be varied?

[6] Mr. Mbolekwa’s motion is brought in the context of an application by Ms. Pascall to set aside the provisions of the separation agreement entered into between the parties after separated in 2005. Her application was based upon an allegation that Mr. Mbolekwa had repudiated the entire agreement as a result of the fact that he had unilaterally decided to stop paying spousal support and, instead, decided to pay additional post-secondary education expenses for his two eldest daughters.

[7] Ms. Pascal’s application was commenced in May, 2013. In July, 2013, she brought a motion (tab 2) for temporary child and spousal support. In an endorsement dated July 24, 2013 (2013 ONSC 4923), I granted her request and made a temporary order that Mr. Mbolekwa pay child support for Olivia in the amount of $952 per month and spousal support in the amount of $550 per month, commencing on August 1, 2013. Although my endorsement was later varied to clarify the issue of arrears and to correct certain errors, the order I made on that date has been in effect since then.

[8] In the present motion, Mr. Mbolekwa seeks to vary my earlier order. He relies on the terms of the separation agreement which provide for the automatic termination of child support in the event of a child turning 18 years of age and ceasing to be in full-time attendance at a recognized program of post-secondary education. He also relies on a clause in the separation agreement providing for a variation of spousal support in the event of a material change in circumstances.

[9] There is an issue in this case, however, as to whether the provisions of the separation agreement are still in full force and effect. In my endorsement of 2013, at paras. 9 and 10, I wrote:

[9] I do not believe that the agreement should be ignored in making a temporary order at this stage. Section 56(4)(c) of the Family Law Act provides that a separation agreement may be set aside in accordance with the law of contract. The question of whether the agreement has been repudiated is an issue for trial. Deciding that question requires a determination not only of whether there has been a breach, but also of whether the breach has the effect of terminating the agreement.

[10] The agreement in this case might also be set aside on the basis of the principles set out by the Supreme Court of Canada in Miglin v. Miglin, 2003 SCC 24, [2003] S.C.J. No. 21. Either way, however, the issue should not be decided in a summary way (see Kelly v. Kelly, [2004] O.J. No. 3108 (Ont. C.A.), at para. 22), which is effectively what I am being asked to do on behalf of Ms. Pascall.

[10] Although that endorsement was made more than two years ago, Ms. Pascall’s application has still not yet even proceeded to a settlement conference. Thus, there is still an issue as to whether the entire separation agreement has been repudiated.

[11] Even if it has, however, I believe that Mr. Mbolekwa has overcome the hurdles necessary to seek a change in child and spousal support under the Family Law Act, R.S.O. 1990, c. F3. Pursuant to s. 37 of the Family Law Act, Mr. Mbolekwa must show a material change in circumstances in order to obtain a variation of spousal support. He need only demonstrate a change of circumstances in order to obtain a variation with respect to child support. Additionally, where a party seeks to vary an interim order, as in this case, that party must also explain why the change should be considered on an interim basis, rather than at trial: McGee v. McGee (1990), 50 R.F.L. (4th) 418 (Ont. S.C.).

[12] In my view, Mr. Mbolekwa’s retirement in March, 2014, satisfies the material change in circumstances requirement. The fact that this matter has not yet been the subject of a settlement conference, let alone the setting of a trial date, satisfies the second requirement.

[13] I will now deal separately with each request for a variation.

Child Support

[14] Olivia turned 18 in September, 2014. She was registered to attend Ryerson University beginning in the fall of 2015. However, she changed her mind at the last minute because she was uncertain as to what path she wanted to follow. She is now 19. She is not attending any recognized post-secondary education program. Instead, she is living with Ms. Pascall and working part-time. For that reason, Ms. Pascall concedes that Mr. Mbolekwa is no longer required to pay support for Olivia pursuant to the terms of the separation agreement. Therefore, an order terminating support for Olivia shall issue, effective November 1, 2015.

[15] Mr. Mbolekwa continued paying support for Olivia up to September, 2015, when she decided not to go to Ryerson. It might be argued that Mr. Mbolekwa was not obliged by the terms of the separation agreement to pay support for Olivia past the completion of high school, given her decision. However, Mr. Mbolekwa seeks to have the variation take effect only on November 1, 2015. In order to ensure that there is no confusion on the issue, the order shall fix any arrears of child support with respect to Olivia at $0.

Spousal Support

[16] As I indicated in my 2013 endorsement, the separation agreement provided that Mr. Mbolekwa is to pay spousal support in the amount of $400 per month and that the issues of both entitlement to such support and the amount thereof were to be reviewed after four years. However, no review was ever undertaken. Instead, the parties agreed to increase the amount of support being paid by Mr. Mbolekwa as his income increased. By August of 2012, Mr. Mbolekwa was paying Ms. Pascall support in the amount of $550 per month.

[17] The separation agreement also provided for the equalization of family property. Like many couples, the largest assets at the time were the matrimonial home and Mr. Mbolekwa’s employment pension. The parties agreed to sell the matrimonial home and to divide the proceeds equally after paying off a number of debts. With respect to Mr. Mbolekwa’s pension, the parties agreed that Ms. Pascall was entitled to 50% of the income accrued during the parties’ cohabitation, which was valued at $191,640.59. Pursuant to the separation agreement, Mr. Mbolekwa filed a request for division of the pension at source in this amount, less the sum of $6,250, representing adjustments relating to Ms. Pascall’s RRSP and the parties’ interests in the family vehicle.

[18] At the time the separation agreement was entered into, Mr. Mbolekwa was employed in the military. As of the date of my July, 2013, endorsement, Mr. Mbolekwa was earning over $110,000 per year. However, in March, 2014, Mr. Mbolekwa retired from the military and began drawing on his pension. He also began receiving long-term disability (“LTD”) benefits. Mr. Mbolekwa presently receives the sum of $4,092.09 per month from his pension and $3,053.93 per month in LTD benefits. According to Mr. Mbolekwa’s affidavit evidence, the LTD benefits will cease as of April 1, 2016.

[19] On behalf of Mr. Mbolekwa, Mr. Hamilton submits that Mr. Mbolekwa’s pension income should not be taken into account for the purposes of calculating spousal support. He submits that, otherwise, Ms. Pascall would be “double dipping”. He relies on the Supreme Court of Canada decision in Boston v. Boston, 2001 SCC 43, [2001] 2 S.C.R. 413, in support of his submission that such double recovery should be avoided.

[20] In Boston, Major J. succinctly explained the problem of double recovery on behalf of the majority as follows, at para. 34:

The term “double recovery” is used to describe the situation where a pension, once equalized as property, is also treated as income from which the pension-holding spouse (here the husband) must make spousal support payments. Expressed another way, upon marriage dissolution the payee spouse (here the wife) receives assets and an equalization payment that take into account the capital value of the husband’s future pension income. If she later shares in the pension income as spousal support when the pension is in pay after the husband has retired, the wife can be said to be recovering twice from the pension: first at the time of the equalization of assets and again as support from the pension income.

[21] Mr. Hamilton submits that, in order to avoid double recovery in this case, the entire monthly pension income should be disregarded and any ordered spousal support should be based solely on Mr. Mbolekwa’s LTD income. I disagree.

[22] As the Supreme Court of Canada made clear in Boston, double recovery occurs only with respect to the equalized portion of the payor’s pension income. In this case, equalization of the pension took place in 2006, with actual division occurring in 2007. Mr. Mbolekwa continued to make contributions to his pension plan from the date of separation in 2005 until he retired in 2014. Those contributions were never equalized, of course. According to the rationale in Boston, no double recovery occurs where support is funded by the contributions made to a pension plan after equalization. For the purposes of these reasons, I will call these contributions the “non-equalized” contributions.

[23] The problem in this case, however, is that I have not been provided with any specific information on exactly what portion Mr. Mbolekwa’s present monthly pension income is funded by equalized, as opposed to non-equalized, pension contributions. I do, nonetheless, have some information that I believe can be used to make a reasonable approximation in this regard.

[24] Mr. Mbolekwa deposes (at para 4 of his October 14, 2015 affidavit) that his monthly pension was reduced by the sum of $11,649.24 annually, or $970.77 monthly, as a result of the equalization of his pension plan. Assuming that the parties were married throughout the time that Mr. Mbolekwa began contributing to the plan, or close to it, it is reasonable to assume that the pension was divided in 2006 more or less equally between the parties. It follows, therefore, that of the total monthly amount now received by Mr. Mbolekwa in the amount of $4,092.09, approximately $970.77 is funded by that portion of Mr. Mbolekwa’s pension that was equalized. This leaves monthly pension income of $3,121.32 per month, or $37,455.84 annually, from which to fund spousal support without any double recovery in the part of Ms. Pascall. Including Mr. Mbolekwa’s disability income, he has available the sum of $6,175 per month, or $74,103 per year, until April, 2016, from which to pay support. After that date, his income will consist solely of the $37,455.84 that he will receive annually from the non-equalized portion of his pension plan.

[25] These are the means available to pay spousal support. The question remains as to Ms. Pascall’s needs.

[26] About four years before the parties separated, Ms. Pascall returned to the workforce full-time and began to manage a hairdressing salon/barbershop. Since at least 2010, she has been renting space in that shop and managing her own hairstyling business. According to her income tax returns, her net income from this business has been as follows:

2010: $6,596.55 2011: $5,582.29 2012: $4,859.22 2013: $12,264.35 2014: $13,498.70

[27] From this table, it appears that Ms. Pascall’s income has been increasing slightly in each of the last two years. I believe that it is reasonable to assume that her net income for 2015 will approximate $15,000.

[28] Since 2010, Ms. Pascall has withdrawn money on the basis of hardship from the equalized pension funds as follows:

2010: $18,195.56 2011: $13,376.00 2012: $19,054.00 2013: $126.00 2014: $15,829.00 (possibly)

[29] There is some confusion, at least on my part, with respect to the year 2014. Ms. Pascall’s revised 2014 assessment shows an additional $15,829 income above and beyond her net business income and her spousal support. It is not clear to me whether all of this is comprised of funds withdrawn from the pension funds. If not, certainly a large part of it is.

[30] The numbers I have set out above satisfy me that there is a continuing need for spousal support on the part of Ms. Pascall. Ms. Pascall enjoys her work and her clientele and enjoys seeing the business grow. However, she admits that she could earn more money by working other than in her own hairstyling business. In my view, Ms. Pascall must do more to become self-sufficient. This was always the intention of the parties as reflected in clause 9(3) of the separation agreement. For that reason, I accept the submission made on behalf of Mr. Mbolekwa that the quantum of spousal support should be based on imputed income on the part of Ms. Pascall of $22,000 per year. This is roughly what she would earn annually if paid minimum wage. That said, I believe that Ms. Pascall ought to be provided with a further period of time in which to adjust to the change in spousal support and to reach this level of income.

[31] Using Mr. Mbolekwa’s present non-equalized pension and disability income of $74,103, and income in the amount of $15,000 for Ms. Pascall, I calculate that the spousal support payable by virtue of the Spousal Support Guidelines ranges from a low of $1,182 to a high of $1,576, with a mid-point of $1,379. I believe that Mr. Mbolekwa should pay spousal support in the amount of $1,300 per month, which is slightly less than the mid-point of the range set out above, for the period of time from November 1, 2015 to April 1, 2016. This is the same amount as Ms. Pascall’s present monthly rent. She submitted during argument that, if she could continue to get that much from Mr. Mbolekwa, she could survive. I believe that she should receive that amount, but not forever.

[32] As Ms. Pascall also indicated during argument, she may have to move to smaller quarters based on the reduction of Mr. Mbolekwa’s income effective April 1, 2016. I believe that she will have to do so. For that reason, commencing April 1, 2016, spousal support should be paid based on Mr. Mbolekwa’s non-equalized pension income of $37,455.84 and Ms. Pascall’s projected 2015 income of $15,000. The Spousal Support Guidelines set the range of support using those numbers at between $449 and $599, with a mid-point of $524. I believe that Mr. Mbolekwa should begin paying spousal support in the amount of $550 on April 1, 2016, which is the amount he is presently paying.

[33] By September, 2016, Ms. Pascall should be earning at least minimum wage. Again having regard to the Spousal Support Guidelines, I calculate the range of spousal support to be from $309 to $412 per month, with a mid-point of $361 for a payor earning $37,456 and a recipient earning $22,000. Ironically, and I believe justly, this is the range within which the parties’ original agreement of $400 per month falls. It would be appropriate, in my view, for Mr. Mbolekwa to pay spousal support in that amount from September 1, 2016 forward.

[34] For these reasons, an order shall issue that, effective November 1, 2015, and on the first day of each month thereafter, Mr. Mbolekwa shall pay spousal support in the amount of $1,300 per month. On April 1, 2016, and on the first day of each month thereafter, Mr. Mbolekwa shall pay spousal support in the amount of $550. On September 1, 2016, and on the first day of each month thereafter, Mr. Mbolekwa shall pay spousal support in the amount of $400.

Issue 2: Should the variations be temporary or final?

[35] As I indicated at the outset of this endorsement, Mr. Mbolekwa seeks a final order terminating his child support payments and simply “an order” reducing spousal support. In my view, both the orders regarding child support and the order regarding spousal support should be temporary, and not final.

[36] While the separation agreement does provide that Mr. Mbolekwa may terminate child support once a child is over 18 and is no longer in school, it is not clear whether the separation agreement provides that Mr. Mbolekwa’s obligation to pay child support ends at that point. The contract simply provides that “support shall terminate” on the earlier of the triggering events.

[37] In any event, pursuant to s. 56(1.1) of the Family Law Act, a court may disregard any provision in a separation agreement pertaining to child support, having regard to the Child Support Guidelines. Sections 3(2) and (7) of those guidelines permit a court to order support for a dependent child, including the payment of expenses related to post-secondary education.

[38] I believe that it would be best to make the variation in child support temporary. Olivia has not made a final determination that she will not attend post-secondary education. I do not believe that it would be fair or reasonable to preclude her from receiving any further financial assistance from her father towards a post-secondary education simply because she took some time to make such an important decision.

[39] I also believe that the spousal support variation should be temporary, given that the central issue in this case, namely whether the separation agreement has been repudiated, still has to be resolved. It has not escaped me, however, that the result of my analysis, if made final, would have the effect of putting the parties in a very similar position to that in which they placed themselves in 2006, making that issue somewhat moot.

NEXT STEPS

[40] As I indicated earlier, despite the age of this matter, it has still not yet been the subject of a settlement conference. The parties are directed, therefore, to fix a date for a settlement conference through the office of the trial coordinator. Given my familiarity with this matter, I believe that the settlement conference should be held before me.

COSTS

[41] The matter of costs was not addressed during the hearing of the motion. I believe that that issue should be adjourned to the settlement conference, and I so order.

Ellies J.

Date: December 1, 2015