Court File and Parties
COURT FILE NO.: FS-12-00380635-0000 DATE: 20160513 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: Ruth Mary Henderson Bhatnagar, Applicant
- and - Dinesh Bhatnagar, Respondent
COUNSEL: Erica L. James, for the Applicant Stephanie Okola, for the Respondent
HEARD: April 25, 26 & 27, 2016
BEFORE: Hood J.
Reasons for Decision
Nature of Issue
1The Applicant, Ruth Mary Henderson Bhatnagar (the “AW”), is 66 years old, soon to be 67. The Respondent, Dinesh Bhatnagar (the “RH”), recently turned 69.
2The parties married on February 1, 1969, and separated in early 2006 after nearly 37 years of marriage. The issues in this trial are the quantum of spousal support the RH should pay to the AW, and the duration of any support. The RH acknowledges that the AW is entitled to support.
3The AW argues that she is entitled to $2,000 per month on an indefinite basis. Alternatively, she argues for a lump sum payment of $200,000. The RH argues that the AW is entitled to a range of $106 to $142 per month on an indefinite basis. He also asks that the AW repay him $127,000 for overpayment of support and other payments received by her since 2006.
Decision
4For the reasons that follow, I find it appropriate in all of the circumstances to award the AW a lump sum payment of $200,000. I dismiss the claim by the RH for any repayment of funds.
Factual Background
5The AW and RH met in 1968 at McDonald College at McGill University. She was studying to be a teacher, he was a PhD student.
6They married on February 1, 1969. Their daughter, Rachna, now 47, was born in September 9, 1969. Their son, Ravi, was born in 1972 and their other daughter, Sheila, in 1979.
7The RH was unable to complete his PhD after his children were born. The RH came to Canada from India to become a researcher or a professor, but because of his new family commitments was unable to do either. He testified that in his view, he lost many opportunities in life by not having completed his PhD. The RH testified that if he had completed his PhD, he believes he would now be a retired professor with a good pension.
8There was no evidence called to support the RH’s testimony in this regard. What this testimony did disclose, however, was his resentment of having his career aspirations thwarted by the AW’s pregnancy and their subsequent marriage. The AW testified that at one point during the breakup of their marriage, the RH said to her that he was finally “out of the box he was put in 40 years before”.
9Following marriage, the RH found a job in Montreal in the food industry as a microbiologist in quality control. The AW stayed at home and raised their family rather than completing her Teacher’s degree at that time. As agreed in the statement of facts filed as part of the trial record, the AW was primarily a homemaker during the marriage.
10The RH soon joined another company, also in the food industry, this time in a managerial capacity.
11Their home life was difficult. The AW testified, and was unchallenged in cross-examination or by the RH’s testimony, that the RH had a violent temper which created problems in the home. As a result of these problems, they separated for about a year starting in the summer of 1991 until the RH agreed to attend anger management courses.
12Rachna, their eldest daughter, testified that the family was rife with conflict due to the RH’s temper. She spent her childhood trying to avoid inflaming his anger by trying to meet his expectations and to comply with his orders. Despite these efforts, she found herself generally unable to meet his expectations so the RH was constantly angry. It was a daily occurrence. Feeling that she was a source of the RH’s anger and resulting conflict, she left home to live with relatives before her sixteenth birthday.
13Rachna further testified that when the RH became angry with her, the AW tried to protect or shield her which led to further conflict. She said that the AW had to try to respond to the RH’s needs as they arose and tried to do what was asked of her in order to prevent the RH’s anger. In her view, the RH treated the AW as staff to look after his needs. Rachna testified that the RH told her that he treated the AW as a servant because taking care of his needs is what she was supposed to do. Her evidence on this was unchallenged and I found her to be a credible witness.
14While spousal misconduct is not relevant to spousal support and is specifically excluded from consideration by s. 15.2(5) of the Divorce Act, R.S.C. 1985, c. 3, this evidence is relevant to the issue of economic self-sufficiency, and the RH’s argument that the AW has not done enough to become self-sufficient.
15The AW, in addition to looking after the children and the home, took a couple of part time jobs in Montreal, starting in the mid-1980s as a cashier. In 1989, the RH found a new job in Calgary and he moved to Calgary in the spring of 1989. The AW moved there that summer with Ravi and Sheila, Rachna having already moved out of the home, after the completion of their school year. At that time, the AW was also back at McGill completing her Teacher’s degree and had to wait for the semester to end.
16Eventually, the AW completed her degree in Calgary and obtained her B.Ed. from McGill. The AW was never able to find a permanent teaching position in either Quebec or Alberta. She was once able to obtain a temporary replacement position in Labrador for two months in the winter. She was also able to obtain some substitute jobs in Alberta, but these were 100 kms away from her home in Calgary, and necessitated driving 200 kms per day. Despite sending out numerous resumes and applications in Alberta, she was only able to obtain one interview for a permanent position in an isolated community in northern Alberta, which would have required her to transport by plane. However, she was not offered the job. In order to become certified as a teacher, she had to work full time for 3 years out of a 5-year period. She was never able to do so. As the AW put it, her degree came to be worth nothing.
17The RH argues that the AW did not do enough during their marriage to find work. I disagree. As agreed to by the parties she was primarily a homemaker during the marriage. She tried to use her degree and education as a teacher to obtain work but had limited success in doing so through no fault of her own. Her ability to obtain some other form of work was limited by the demands placed upon her by the RH. He expected her to be there as his “servant” when he wanted, which made it difficult for her to obtain work that did not have regular hours.
18Eventually the parties decided to separate. On January 2, 2006, they signed a Separation Agreement which the RH had drafted from a template he had purchased from a store. The AW testified that although dated January 2, 2006, it was actually signed in May, 2006. She further testified, contrary to what was alleged in her application, that the Separation Agreement was a sham, whereby she and the RH were separated on paper but not in reality, in order to income split, by allowing the RH to deduct his spousal support payments, and to further facilitate her obtaining a mortgage for a retirement home in St. Thomas, Ontario.
19The RH takes the position that January 2, 2006 was the actual separation date and the date the Agreement was signed although the Agreement states they were separated in January, 2005. In this he is supported by Rachna who is a witness to the Separation Agreement. She testified that it was signed before her in her home on January 2, 2006, and that while she was surprised by the Agreement itself, she was not surprised by the separation as her parents had been having difficulties for years.
20Through the parties testimony and argument, it became clear why the AW now testified that they were not separated until 2012. The RH argues that since all of his assets were accumulated post-January, 2006, or post-separation, the AW is not entitled to share in them for support purposes. If I was to find that there was no separation until 2012, then this argument would fall by the wayside.
21I find based upon the Separation Agreement itself, the RH’s testimony, Rachna’s testimony, and the agreed Statement of Facts that the parties did in fact separate on January 2, 2006.
22Pursuant to the Separation Agreement, the RH was to pay the AW $3,500 monthly until, among other things, the RH “losses employments” [sic]. The agreement also provided that in return for $100,000, the AW would forfeit her interest in the matrimonial home. The RH acknowledged at trial that he is not seeking to rely upon the Separation Agreement as being binding, but it does help explain how the parties find themselves in the positions they are now in.
23When asked how he arrived at the monthly payment of $3,500, the RH responded that this is what he thought was fair and was the market value of support paid by others. Who these “others” were, or how they arrived at their support, was not explored in evidence.
24The RH testified that he thought $3,500 was fair based upon what he described as his “regular” income of $140,000, which he made in 2005. In reality, his 2005 income was $261,367 as disclosed on his Notice of Assessment. The RH argues that while his actual line 150 income in 2005 was $261,367, this was comprised of his “regular” income of $140,000 and bonus income of around $120,000, and for some reason, best known to him and unexplained to the court, this bonus income should not be considered for spousal support purposes. I disagree. This is the figure that should have been used for spousal support purposes if the Agreement had been done correctly. While there were no DivorceMate calculations put before me as to what support should be paid on an income of $261,367, counsel for the RH acknowledged that the $3,500 was not close to what would have been ordered on this amount and acknowledged in argument that the figure was likely closer to $10,000 per month.
25Even if his income was $140,000, the support figure should have been closer to $5,500 per month and not $3,500.
26As to the payment of $100,000 for her interest in the matrimonial home, the AW filed at trial a net family property statement as at January, 2006. Pursuant to the statement the AW should on equalization have been paid $75,479 over and above the $100,000 that was paid to her. The AW acknowledges that she is not seeking an equalization payment but this amount is relevant to my determination of the quantum of spousal support that should now be paid.
[27] In the years following 2005 the RH had an income as follows: 2006 $524,667 2007 $580,156 2008 $233,353 2009 $147,276 2010 $231,653
28Despite these income amounts, the AW continued to receive only $3,500 per month from the RH. In the five years following separation, the RH was able to accumulate a sizeable amount of assets, which is not surprising considering the income he had and the fact that he was only paying the AW $3,500 per month as opposed to the amount of support she should have been receiving during this time; closer to $10,000 based upon his income in 2005. If there had been a readjustment for the years following, the AW should have received substantially more than $10,000 in 2006 and 2007, and substantially more than $3,500 in 2008, 2009 and 2010.
29The RH argues that post-separation he had a new job with a new employer so the AW should not share in this increased income. While there may have been new owners of the company he worked for, the company did not change and neither did his job. The RH did not find completely new employment or set off on a new entrepreneurial venture that generated increased income. Even if he had, this does not take away from the fact that based upon his 2005 salary he was dramatically underpaying what he should have been in spousal support to the AW. Assuming that he should have been paying closer to $10,000 per month based on his 2005 income, this would have meant that the AW, over the 5 years following separation, would have received an additional $390,000 in support based upon a monthly difference of $6,500 for a period of 60 months.
30With the $100,000, the AW was able to make a down payment on a home in St. Thomas, Ontario, in order to be closer to her son who also lived in St. Thomas, and closer to Toronto where Rachna and the AW’s granddaughter lived. With this money she was also able to furnish and carry out necessary upgrades and repairs to the home. The house cost approximately $239,000. With the $3,500 per month she was receiving, she was able to pay the mortgage and her other living expenses, but she was not able to save anything.
31In mid-2009, the RH was given notice that his employment would cease at the end of 2010. He was told he would continue to be paid his salary but that he did not need to come into work for the next one and a half years. He decided that this was an opportunity to travel and he did so.
32In January, 2011, the RH stopped paying the $3,500 per month to the AW because he was no longer employed. He says he tried to find a job but he was 64 at the time and despite his education, credentials and work history he could not obtain anything. While he apparently had some form of non-compete agreement with his former employer, which was not put in evidence before me, he had decided to spend the previous one and a half years travelling rather than looking for employment or a new career.
33Ironically, the RH now argues that the AW who in 2011 was 61 and had been out of the workplace for many years, and without the education or background he had, should have found a job or embarked upon a new career. While she had a B.Ed., she was not certified to teach and as admitted by the RH had primarily been a homemaker during the marriage. I find that in her circumstances it was not unreasonable for her to not seek a new career or job.
34In 2011 and for part of 2012, the RH paid the AW $1,600 per month. The AW testified that this amount covered the mortgage on the home in St. Thomas and the utilities for the house.
35The RH continued to travel and rented out the matrimonial home in Calgary for $1,400 per month. He provided the AW with his bank card and told her that she could access the bank account, where the rental income was deposited, for other expenses. She did so. She testified that with no income other than the $1,600 per month from the RH she was forced to use the rental monies to pay for food and to cover other expenses like the upkeep of the St. Thomas property.
36In January, 2012, the RH told the AW that he was retired, he no longer had to look after her and he would only pay her $1,600 per month for one more year. He said he would allow her to continue to use the bank card to access the rental income for another year. He also told her that he was now “out of the box he was put in 40 years before”. He intended to continue travelling.
37Soon thereafter, the AW saw a lawyer and issued her application in August, 2012. When asked why she did this now the AW said that she simply “did not want to put up with this nonsense any longer”.
38Once the application was served, the RH stopped paying the support of $1,600 per month.
39Without any support, the AW was forced to sell the home in St. Thomas. The home sold in January, 2013 for approximately $229,000, which was less than what it was bought for. From the sale, after the payment of the mortgage and other costs of closing she received $47,326. She used most of this money to pay off outstanding debts and used the balance to live on as she was not receiving any support and had no OAS or CPP income. She lived with her daughter, Rachna, as she had no other place to go to. Rachna helped support the AW despite being a single parent herself.
40The AW now has income from OAS and CPP in the amount of $961 per month. She brought a motion for interim support and on October 21, 2014 Kiteley J. ordered the RH to pay retroactive support of $2,116 from November 25, 2013, being the original date of the motion. The AW currently lives in subsidized City of Toronto housing. As agreed by the parties, she has no net assets and is approximately $40,000 in debt.
41The RH’s income from OAS and CPP is $1,160 per month. His other income from assets, interest and his RRSPs is variable, and for 2015 was less than $100 per month. As agreed by the parties, his gross assets are approximately $974,000. He has no debts.
Analysis
42Under s. 15.2 of the Divorce Act, the court may order a spouse to pay such lump sum or periodic sums that it deems reasonable for the support of the other spouse. Under s. 15.2(4), the court shall take into consideration the condition, means, needs and other circumstances of each spouse including the length and time they cohabited, the functions performed by each during cohabitation and any agreement relating to support of either spouse.
43This was a long-term marriage from 1969 to 2006. The AW was primarily a homemaker for the RH and their three children. The RH is not seeking to rely upon the Separation Agreement for the purposes of this section of the Act.
44Pursuant to s. 15.2(6) of the Divorce Act, an order should, among other things, recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown, relieve any economic hardship of the spouses arising from the breakdown of the marriage and in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
45The Family Law Act, R.S.O. 1990 c. F.3 s. 33 follows in slightly different wording than what the Divorce Act sets out in terms of spousal support. Section 33 (a) states that in determining support, the court shall consider all of the circumstances of the parties. The provision then sets out a list of items to be considered including each party’s current assets and means.
46Pursuant to the case law, there are three grounds for entitlement to spousal support, compensatory support, non-compensatory support and contractual support. In this case the latter does not apply. There is no single basis of support that supersedes the other and many claims involve compensatory and non-compensatory principles. The court does not decide on the basis of support to the exclusion of the other, but rather is called upon to apply relevant factors and to strike the balance that best achieves justice in the particular case (See Bracklow v. Bracklow, [1999] 1 S.C.R. 420, at paras. 15, 35, 36, 41 and 42 and Moge v. Moge, [1992] 3 S.C.R. 813, at paras. 46, 47, 74 and 120).
47The RH argues that the court should not consider his post-separation income or post-separation accumulation of assets. He argues that his income now is limited so only a minimal amount of spousal support is payable. This argument ignores the fact that the primary reason he has accumulated his assets was because he substantially underpaid what he ought to have paid in spousal support from 2006 to 2010 inclusive. He was paying $42,000 per annum when he should, at a minimum, have been paying $120,000 per annum based on his pre-separation income. This ignores the fact that his post-separation income rose dramatically in 2006 and 2007 to over $500,000 in each of those years. Nor did he make a proper equalization payment. It is no wonder that he has no debt and $974,000 in gross assets. He achieved this economic position by failing to pay proper support and proper equalization.
48As mentioned previously, while equalization is not a claim being put forward by the AW, it certainly is something that the court can look at in considering the means, needs and circumstances of both parties. The failure to properly equalize upon separation placed the AW in a $75,000 hole to the benefit of the RH.
49The RH did not achieve his economic self-sufficiency through any additional effort or through some extraordinary investment or risk-taking. He worked at the same job that he had throughout the marriage, where he had been supported by the efforts and assistance of the AW. The accumulation of his assets arose primarily on the back of the AW and his failure to pay what he should have. If she had received proper equalization and proper support between 2006 and 2010, it is unlikely she would be in the financial distress she now finds herself in. She lives in assisted housing. The RH owns a small condominium in Toronto without any mortgage. She has sizeable debt in relation to her income. The RH has no debt. She has no assets; whereas the RH’s gross assets are close to $1,000,000. He has sizeable amounts sitting in cash or invested, generating minimal returns, because he does not really need the income to meet his expenses and he did not wish to risk his assets.
50The disparity between the AW’s needs and means and the RH’s is obvious. The AW was economically disadvantaged by the marriage breakdown. Her standard of living has been significantly reduced. While the RH lives modestly, he does own his home and travels extensively. He has far less financial concerns than the AW. While neither may be able to maintain a lifestyle comparable to that enjoyed during the marriage, the AW is in a far worse situation.
51The RH argues that the AW should become self-sufficient. However, as recognized in Boston v. Boston, [2001] S.C.R. 413, for spouses who remained at home during a long marriage, self-sufficiency will not be practicable. She is now 66. She should not have to find a job any more than the RH should have to. Self-sufficiency does not mean simply surviving on a minimum income. Rather it relates to the ability to support a reasonable standard of living (See Fisher v. Fisher, 2008 ONCA 11, at paras. 49 - 58).
52The RH argues that if any amount of support is paid to the AW this will be double recovery in that the AW has already received $100,000 from the matrimonial home in Calgary. Part of his current assets are comprised of the proceeds of sale of the Calgary home, which closed on March 2, 2015 and netted the RH $316,683 on March 2, 2015 and a further holdback amount of $2,500 on September 2, 2015.
53There is no double recovery here. There was no proper equalization in 2006 nor was there proper support, which would have allowed the AW to create her own retirement fund. What she received was enough to survive, not enough to create savings so as to generate some income in the future. This is the same answer to the RH’s argument that the AW’s economic hardship is the result of her poor financial management. She had nothing to manage. What she received was only enough to survive.
54The RH argues that retired spouses should only have to pay spousal support based on their income. He argues it is unrealistic to conclude that he can generate enough income from his assets to pay support. His evidence was that his assets, other than the condominium and RRSPs, were either in cash or in bank accounts and investments generating minimal income. While that may be so, the value of his assets, which is something I am entitled to consider in determining the amount and duration of support, approximate $1,000,000. The AW has no assets.
55The AW asks for $2,000 per month indefinitely or a lump sum payment of $200,000. I have the discretion to order a lump sum payment. I must weigh the perceived advantages against the disadvantages of making such an order (See Davis v. Crawford (2011), 106 O.R. (3d) 221, 2011 ONCA 294 at paras. 52-56 and 66-69). One of the advantages is that there are no collection issues, which have arisen in the past. There is, I believe, a real risk of non-payment of periodic support based upon past history. Also, this will achieve finality between the parties. It will effect a clean break. The RH argues that he will be unable to create enough income to pay periodic support. He does however have the ability to pay a lump sum. He has sizeable assets. He will probably have to collapse some of his accounts to come up with the funds to make this support payment. That is fair. He will still have far more than the AW once this is done. While no disadvantages of a lump sum payment were specifically argued I have considered potential disadvantages as set out in Davis in coming to this conclusion. I believe it appropriate to order a lump sum payment rather than monthly spousal support.
56The AW asks for a lump sum payment of $200,000. There was limited evidence in support of this amount. The AW intended to call Bronwen Bruch to give expert evidence on various support scenarios and evidence on an appropriate lump sum payment. Ms. Bruch was not called due to AW’s financial constraints. There was no evidence as to what amount of income this would generate for the AW or for how long.
57The AW argues for this amount as being approximately 1/3 of the RH’s net assets of $612,000. As I have previously set out, the means, needs and circumstances of the parties are at polar opposites. While the AW is in debt, with no assets, and living in assisted housing, the RH is able to let $56,000 sit in bank drafts generating no income while living in his unencumbered condominium. He was going to use the bank drafts to travel around the world for the next few years, but put off his travels due to the ongoing litigation with the AW. This money has not generated any income and has just been sitting there.
58I find in all of the circumstances that a lump sum payment of $200,000 is entirely reasonable and fair.
Overpayment by the RH
59While there is no specific claim in the RH’s Answer seeking the return of this “overpayment” of support, the argument was made at trial.
60This claim is premised upon the Separation Agreement being enforceable. Having found that the RH seriously underpaid for both spousal support and equalization since 2006, I dismiss this claim.
Car
61The AW is in possession of a 2008 Toyota automobile. Apparently the car is still in the RH’s name although the AW pays for its vehicle license. Its value is part of the RH’s above referenced overpayment claim. The AW claims she has attempted to return it to the RH but he refuses to take it. The RH claims he has demanded its return but that the AW refuses to provide it. The AW has included its expense in her financial statements. Now that she resides in Toronto she says she has no use for it but it still costs her close to $500 per month in expenses she cannot afford and does not need, hence the reason she wants to return it to the RH.
62Both parties want the same result so it does not matter for the purpose of the trial who was right or wrong in their previous positions. The RH shall make immediate arrangements to obtain physical possession of the car from the AW. Once in his possession he is free to keep the car or sell it and keep the proceeds from the sale. The RH shall pay the AW for the pro rata share of the vehicle license for 2016, and thereafter the AW shall sign whatever documentation may be necessary to effect the transfer of the license.
Divorce
63The parties are not yet divorced although they both want to be. Either party is free to obtain a divorce on an uncontested basis.
Costs
64In my view, the AW has succeeded on the significant issues. She is presumptively entitled to costs. I would hope that the parties would be able to reach an agreement on costs. I encourage the parties to try to do so.
65If unable to do so, the AW may file brief written submissions, not to exceed three typed double-spaced pages, together with a Bill of Costs and any necessary documents, such as offers to settle, on or before June 3, 2016. Any reply submissions, subject to the same directions, are to be filed within three weeks of service of the initial submissions. I understand that often the parties, following service, file their submissions as part of the continuing record. The court office does not always bring the submissions to the court’s attention as they are unaware that the court is waiting for these submissions. Accordingly, I direct the parties to not only file their respective cost submissions as part of the continuing record, but to also provide a copy directly to Judges’ Administration, Room 170, at 361 University Avenue, to my attention.
Order
[66] The court therefore orders: (a) the respondent shall pay $200,000 to the applicant for spousal support. (b) the respondent’s claims against the applicant are dismissed. (c) the respondent is to make immediate arrangements to obtain physical possession of the 2008 Toyota automobile presently in the applicant’s possession. The respondent may keep or sell same and if sold retain the proceeds from the sale. The respondent shall pay the applicant the pro rata share of the vehicle license for 2016 and thereafter the applicant shall sign whatever documentation is necessary to effect the transfer. (d) either party is free to obtain a divorce on an uncontested basis. (e) this order bears interest at the postjudgment interest rate set pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43, of [to be inserted by the Registrar] % per year on any payment or payments in respect of which there is a default, from the date of default. (f) unless this order is withdrawn by the Director of the Family Responsibility Office, it shall be enforced by the Director, and amounts owing under the order shall be paid to the Director, who shall pay them to the person to whom they are owed. (g) Support Deduction Order to issue. (h) costs are reserved in accordance with the reasons given. (i) this order is effective immediately.
Released: May 13, 2016 Hood J.