Court File and Parties

COURT FILE NO.: FC-13-1140-2 DATE: 2016-06-10 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Fabiola Castedo, Applicant AND David Justin Haldorsen, Respondent

BEFORE: Justice A. Doyle

COUNSEL: Tanya Davies, counsel for the Applicant Self-represented

Heard: May 12, 2016

Endorsement

1The Applicant brings a motion to change requesting an order terminating her obligation to pay spousal support to the Respondent retroactive to December 1, 2014.

2The parties signed a separation agreement (“agreement”), which has been subsequently registered under the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”). In this agreement, the Applicant agreed to take over $67,000 of joint debts and $5,000 of the Respondent’s personal debt, plus the loss from the sale of the matrimonial home in the amount of $18,000. In exchange, the parties agreed to spousal support of $1,400 per month – an amount below the Spousal Support Advisory Guidelines (“SSAG”) ranges – to be paid by the Applicant to the Respondent.

3The agreement contemplated variation on a material change of circumstances only if the health of a party affected his or her ability to work. The agreement also provided for a review in May 2016.

4Since the date of separation, the Applicant has entered a new relationship. She has had two children from this new relationship and her new partner earns $20,000 per year, with the burden of the family expenses resting largely on her.

5The Respondent has not worked (aside from some part-time contracts) for the past 9 years, having suffered an injury at work approximately 5 years before separation. He suffers from heart sinus, dizziness, vertigo and other ongoing health issues. He is not in receipt of social assistance or disability income.

6The Applicant’s position is that support is unsustainable at the current rate. She is still servicing the debts from the marriage, and will have large childcare expenses when she returns to work full time.

7The Respondent objects to the motion as he is not fully employed and continues to experience medical issues preventing him from working. He agrees to a reduction of support whilst the Applicant is on maternity leave until September 2016. He is requesting spousal support in accordance with the SSAGs.

8The Respondent is concerned with the impact a reduction in support will have on his lifestyle and ability to meet his own needs.

[9] The issues are: (i) What are the relevant considerations in conducting a review pursuant to the agreement? (ii) Does the Applicant’s new family status constitute a material change of circumstances for the purposes of retroactive spousal support?

10For reasons set out below, the Court orders spousal support as follows:

• Commencing January 1, 2015 to September 1, 2016, the Applicant will pay spousal support in the amount of $800 per month (based on an estimated income of $63,449 according to her sworn financial statement dated February 2, 2016);
• Commencing September 1, 2016 when the Applicant returns to work full-time earning approximately $89,000 per annum, spousal support will be $1,000 per month.
• There will be a review of spousal support after June 1, 2018 for a determination of the Respondent’s entitlement, quantum and duration of ongoing spousal support.
• The parties may apply for a variation if there has been a material change of circumstances.

The Marriage

11The parties were married on July 8, 1995 and had no children. They separated on February 26, 2012, at which time the Applicant was 40 and the Respondent was 41 years of age.

12At the time of the marriage, the Applicant was enrolled in the Health Records Management Program at Algonquin College AND the Respondent was working part-time as a personal support worker, while completing his undergraduate degree in psychology. Given their limited financial means, the couple lived with the Applicant’s parents for 13 years.

13Upon graduation, the Applicant worked part-time for 3 days a week at the Ottawa Regional Cancer Centre as a health records coder. The Respondent changed schools and completed his degree via correspondence from a college in Vermont and continued to work 3 to 5 days a week as a personal support worker.

14The Applicant obtained full time employment at the Cancer Centre after 5 years. The Respondent obtained his Masters’ Degree in organizational development in 2003, while earning annual income of $35,000 as a personal support worker and as a youth counsellor. He worked from 2002 until 2009 with the Robert Smart Centre where he injured his back restraining a patient. He also suffered an injury to his back as a result of a car accident in 2006.

15The Respondent became addicted to Oxycodone and Zopiclone which had been prescribed to him as a result of his back injury. He attended a substance abuse program at the Royal Ottawa Hospital. He also suffered from pulmonary embolisms. In 2009 he was brought to the Kemptville hospital for severe chest pain and suffered multiple emboli.

The Separation Agreement

16During the marriage, the parties accumulated debt and the Applicant encouraged the Respondent to apply for disability. The Applicant moved out in April 2012 and moved back in with her parents. She continued to pay the carrying costs on the home and brought groceries for the Respondent. The home sold at a loss of $18,000, which was placed on the Applicant’s line of credit.

17At the time of the agreement, the Respondent indicated he planned to study at a Jewish College, but had to leave early due to medical issues and, on medical advice, states he has not been able to return.

18A mediator drafted the agreement and both parties waived their right to independent legal advice. Pursuant to the agreement, the Applicant agreed that she would pay spousal support to the Respondent in the amount of $1,400 per month commencing May 1, 2013. The parties were divorced by the Order of Justice Maranger dated October 10, 2013 and the divorce is silent with respect to support.

19At the time of the signing of the agreement, the Applicant was working full time at the Children’s Hospital of Eastern Ontario as Manager of health records and earning approximately $89,000 per annum. She has a diploma in health information management and, hotel and restaurant management.

20The agreement indicates that the Respondent had been unemployed for five years due to a series of medical issues. The parties do not agree on this point. The Applicant contends that at the time of the agreement, he did earn some income and none was imputed to him whereas the Respondent states $20,000 per annum of income was imputed to him. There is no evidence to confirm this as the agreement only states that he was unemployed.

21The Respondent has a degree in psychology and a Master’s Degree in Organization Development, and has past experience as a professional counselor with a private practice earning between $30,000 and $50,000 per year.

22The agreement provided for a review as to amount and duration “no later than 1 May 2016”, approximately three years from the date of this Agreement, and more than four years from the date of separation.”

[23] Paragraph 4.6 of the agreement provides that: Spousal support may only be changed if there is a material change in either of our health circumstances that prevent us from working full time in positions that reflect our education, training and experience prior to 1 May 2016.

24Spousal support would terminate in accordance with paragraph 4.7 upon the happening of one of the following events:

• the Applicant died;
• the parties mutually agreed; or
• if the Respondent died provided that the life insurance policy was in place as required by the agreement.

25In paragraph 8.3, the parties acknowledge that the Applicant would assume responsibility for all joint debts totaling $73,754 the Respondent’s Visa debt of $5,869. The Respondent would be responsible for his own student loan of $30,000.

26The matrimonial home was sold at a loss of approximately $18,000 and this amount was placed on the Applicant’s line of credit.

27Pursuant to the agreement, the amount of $95,698.64 was transferred from the Applicant’s pension plan to the Respondent.

After Separation

The Applicant

28In July 2012, a few months after the signing of the agreement, the Applicant moved in with her boyfriend (now fiancé). Her fiancé became ill in October 2012, at which time he was diagnosed with Crohn’s disease. He was hospitalized for four months and underwent several surgeries. He returned to work in June 2013 as a courier earning $1,000 to $1,200 per month. He now earns $20,000 per year as a courier.

29In September 2013, the Applicant filed a consumer proposal that allowed her to pay $500 per month for five years for her debts.

30Their first child was born in June 2014. From June 2014 to November 2014, the Applicant received 84% of her salary. From November 2014 to May 2015, she was on Employment Insurance benefits (EI) and in June 2015, she returned to work.

31She contacted the Respondent regarding ongoing support and he advised her that he was prepared to accept $1,000 per month whilst she was on maternity leave. She then requested that she be allowed a reduction in support to $300 per month while she was in receipt of EI and only receiving income of $1,804 per month. She further advised him that upon her return to work, the monthly daycare cost would be $860 per month for her daughter and would be unable to afford monthly spousal support payments of $1,400.

32The Respondent responded by filing the agreement with the Court for enforcement by the Family Responsibility Office (FRO).

33In January 2016 the Applicant had another child and she is again on maternity leave.

34The Applicant is presently receiving $537 per week on EI and a top up from her employer for a total gross income of $6,010 per month (84% of her salary) and FRO is garnishing 50% for support. She is also receiving monthly child tax credits of $230.

35She states that upon her return to work (July or September 2016), she will be paying $43 per day per child for daycare, amounting to $1,720 per month. Her monthly rent is $1,500 and she and her fiancé equally share this expense. Diapers cost $180 per month and supplemental formula costs $20 per month.

36She has been unable to maintain the $500 per month for the consumer proposal and they have given her a reprieve from February to the end of April 2016.

The Respondent

i) Medical Issues

37The Respondent states that, since separation, he has continued to experience ongoing medical issues including:

• in 2012, he was diagnosed with bradycardia and tachycardia;
• he has attended emergency departments several times due to very low heart rate;
• he has periods of light headedness with fatigue, soreness, leg/ankle swelling and “cognitive underperformance”;
• he has recently been told that he has “heart sinus” issues and says he will be contacting a cardiac expert;
• in the last few months, he has had extreme vertigo and nausea and has been referred to a neurologist and is undergoing testing; and
• he experiences dizziness which makes it challenging for him to walk.

38The reports filed are as follows:

• hospital emergency report of August 11, 2014 for palpitations and irregular heart beat – diagnosis sinus bradycardia;
• hospital emergency report dated September 10, 2014 for palpitations – patient feels better when standing or lying but not sitting – diagnosis symptomatic bradycardia;
• hospital emergency report dated March 9, 2015 for dizziness where “patient complains of dizziness and vertigo” and “symptoms started after viral illness 3 weeks ago” – diagnosis labrinthitis;
• Ottawa Hospital report dated April 30, 2015 from a neurology clinical note summarized the clinical impression as the Respondent having “…. long-standing complaints of dizziness and nausea and relatively recent episodes of neurological symptoms lasting a few seconds or minutes. The “micro episodes” could represent epileptic seizures although they sound a bit atypical”. Further testing including an EEG and MRI were ordered;
• Ottawa Hospital report dated July 29, 2015 from a neurology consultation summarized the visit as follows: “disabling complaints of vertigo and cognitive dysfunction. There is no evidence of a structural abnormality such as multiple sclerosis or strokes to explain his symptoms.” He was referred to the Vertigo clinic for an assessment;
• a letter from Dr. Zwicker from the division of neurology at the Ottawa hospital dated July 29, 2015 states that the Respondent is being evaluated for disabling vertigo which is currently preventing him from working and attending his religious obligations;
• a letter from Dr. Vanessa Murley from the Ottawa Civic family health team dated September 21, 2015 confirms that the Respondent has been a patient of the clinic since August 13, 2014 and he has had “longstanding symptoms of undifferentiated dizziness and nausea that have reduced his capacity to work by 70-80%. He has several consultations with specialists with no significant improvement in his symptoms”;
• a report from the multidisciplinary dizziness clinic to Dr. Jocelyn Zwicker indicating that an appointment was being made for the Respondent on September 7, 2016 for an assessment by 3 specialists;
• a visit summary from the Ottawa Hospital dated February 11, 2016 with an attached emergency report dated February 10, 2016 indicating a diagnosis of chronic dizziness and chest pain.

39He indicated that in a recent heart testing a few weeks ago, he was told that he had a heart “sinus”. He has been told to sit or lay down when feeling vertigo and nausea which doctors believe is caused by inner ear problems. In his affidavit, he states that the preliminary diagnosis from his family doctor was “slow heart rate” or bradycardia probably due to “electrical heart damage” from the emboli. This has now been ruled out and he states that the cardiologist suspects it is a “vagal nerve” disorder. The emergency department told him it is likely laberynthitis and he has been referred to a neurologist.

40Last year he had an intense period of inner ear symptoms, lost about 50 pounds in three months and was experiencing difficulty eating and drinking, but could not afford the medication.

41The Respondent indicated that he received a letter from the ministry dated March 21, 2016 advising him that the condition of Vestibular disorder affects his ability to drive safely and requesting that he take the letter to his physician to obtain an update regarding his condition.

ii) Financial Issues

42The non-payment of support has caused him financial hardship and at times he has not been able to pay his rent. He is currently in a one room basement apartment but would like to move to a small one bedroom apartment close to his Jewish community.

43He is unable to make medical appointments due to intense symptoms or lack of funds for a cab.

44He states that his medical needs are compromised due to lack of funds:

• he requires specialized cognitive testing not covered by OHIP;
• he cannot always fill a prescription as he has no funds;
• his medical plan does not cover all testing and it lapsed due to lack of payments on two occasions; and
• he is not eligible for a more comprehensive medical/dental coverage due to his pre-existing conditions.

45He was told he does not qualify for the Ontario Disability Support program as he has access to a LIRA account.

46He struggles to meet basic costs including food, heat, phone, and controlling good air quality in his small apartment. He is working, on a part time basis, as an online freelance writer and as a social media consultant/content marketer. He made $800 last year and has just received a contract for $1,000.

[47] His income is shown as follows: 2012 – no income (other than spousal support); 2013 – no income (other than spousal support); 2014 – $39,750 from T4 RSP slips (and spousal support).

48He completed an online course in corporate wellness coaching and is taking a program called “Sleep Science Coach”.

49The Respondent’s financial statement dated April 1, 2016 indicates spousal support along with other unidentified income of $916.66 per month (approximately $10,000 per annum). He does not show the amount remaining in his LIRA, although he has indicated that he still has approximately ½ left from the transfer of the Applicant’s pension pursuant to the parties’ agreement. This would amount to $46,000.

50He still has student loans of $30,000 and owes his family $60,000.

The Applicant’s Position

51The Applicant pleads that there has been a material change of circumstances in that her health condition, i.e. her pregnancies, have prevented her from working full time resulting in a reduction of income. She is requesting retroactive adjustment as a result of this material change of circumstances.

52She submits that the fact that she would have two children was not foreseeable at the time of the agreement.

53In addition, a review in May 2016 was anticipated by virtue of the agreement, and priority must be given to her two children over the Respondent. A review must be treated as an application of the first instance, not a variation application. The review must take into account the same factors that would be taken in determining spousal support in the first instance.

54The Applicant argues that the Respondent has not made sufficient efforts to become self-sufficient and if he claims that he is ill, he should have applied to Ontario Disability Support Program and/or CPP disability. Alternatively, he could have registered for job retraining and found employment compatible with his health restrictions.

55The Respondent also has access to her pension transfer from separation in the form of LIRA funds.

56The Applicant submits that the medical reports filed are vague and not definitive and mostly consist of his self-reporting symptoms.

57There are no test results with respect to the extent of his medical issues. There is no report that states that his health issues prevent him from working.

The Respondent’s Position

58The Respondent wishes to continue to receive spousal support but he is seeking a higher amount in accordance with the SSAGs.

59At the time of the agreement, the Applicant had assumed the burden of most of the family debts and he was prepared to accept an amount below the SSAGs. She has now filed a consumer proposal. He has been contacted by creditors who are demanding payment. He indicates that to the extent that the Applicant does not pay the joint debts, he will be responsible for the unpaid portion. Therefore, he is no longer prepared to accept a lower amount outside the range of the SSAGs.

60He has had to withdraw from the LIRA account which was supposed to be set aside for his retirement.

61He admits that he agreed to $1,000 per month on a short term basis until the Applicant returned to work.

62His standard of living has decreased and he is currently living in a bachelor apartment where he had to incur expenses to winterize the basement apartment and buy a heater and humidifier to ensure better air quality. He lives modestly and borrows money from friends.

63He believes that it is premature to review the support payments as his medical condition has deteriorated. He has an assessment to be conducted at the Dizziness Clinic in September and has been referred to a neuro-cognitive specialist.

64He is prepared to undergo an employability assessment and would like to share the cost with the Applicant.

65He is not in a position to work full time given his medical problems. He last attended the emergency room on February 10, 2016 for dizziness.

66He indicates that during the marriage the parties attempted to have a child and had attended fertility treatment. He submits that the Applicant’s decision to have children should not constitute an event that should “surprise either of us”.

67He is suggesting that the Applicant’s choice to have a family should not affect his spousal support which really should be in the mid-range.

68His work opportunities are diminished as he is not in a position to do professional counselling of mental health issues as he is not licensed, but he can counsel in cases that do not include mental health issues.

(i) What are the relevant considerations in conducting a review pursuant to the agreement?

Legal Principles

69A review is a support application in the first instance: Grimba v. Bossi, 2012 ONSC 1386, at para. 18. See Bergeron v. Bergeron (1999), 2 R.F.L. (5th) 57 (Ont. S.C.), where Aston J, at para. 12, states: “review orders are a particularly useful tool in the fair determination of long-term spousal support obligations in those situations where a dependent spouse will need time to re-educate, upgrade skills or otherwise find suitable employment.”

[70] In Leyland v. Baillie, [2006] O.T.C. 300 (S.C.), at para 51, Justice Coats states: The review must take into consideration the same factors and objectives which would be employed in determining a spousal support application in the first instance. This does not mean that the court ignores the circumstances of the execution of the Separation Agreement, what has happened since and the current circumstances at the time of the review. The court must consider all of the background as a context for the review. The Separation Agreement is part of the backdrop of the review, as is the pre-Agreement and post-Agreement circumstances of each party. On a review of the provisions of a valid Agreement, the court should take into account the present circumstances in a way that continues to give due weight to the original agreement.

[71] In Fisher v. Fisher, 2008 ONCA 11, 88 O.R. (3d) 241, at para. 63, Justice Lang speaking on behalf of the Court of Appeal stated: A review allows an application for support without the need to prove the material change in circumstances required in a s. 17 variation application. Unless the review is restricted to a specific issue, it is generally equivalent to an initial application for support and necessitates a complete rehearing of every issue from entitlement to quantum.

Law

Spousal Support

72The separation agreement was filed by the Respondent on May 29, 2015 as a domestic contract with the Court. An agreement filed with the Court can be enforced or changed by a Court order. The relevant provisions for changing the agreement are contained in the FLA.

[73] The support provisions of the FLA are found in s. 33: Purposes of order for support of spouse (8) An order for the support of a spouse should, (a) recognize the spouse’s contribution to the relationship and the economic consequences of the relationship for the spouse; (b) share the economic burden of child support equitably; (c) make fair provision to assist the spouse to become able to contribute to his or her own support; and (d) relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home). R.S.O. 1990, c. F.3, s. 33 (8) ; 1999, c. 6, s. 25 (5); 2005, c. 5, s. 27 (9) .

Determination of amount for support of spouses, parents (9) In determining the amount and duration, if any, of support for a spouse or parent in relation to need, the court shall consider all the circumstances of the parties, including, (a) the dependant’s and respondent’s current assets and means; (b) the assets and means that the dependant and respondent are likely to have in the future; (c) the dependant’s capacity to contribute to his or her own support; (d) the respondent’s capacity to provide support; (e) the dependant’s and respondent’s age and physical and mental health; (f) the dependant’s needs, in determining which the court shall have regard to the accustomed standard of living while the parties resided together; (g) the measures available for the dependant to become able to provide for his or her own support and the length of time and cost involved to enable the dependant to take those measures; (h) any legal obligation of the respondent or dependant to provide support for another person; (i) the desirability of the dependant or respondent remaining at home to care for a child; (j) a contribution by the dependant to the realization of the respondent’s career potential; (k) [repealed] (l) if the dependant is a spouse, i. the length of time the dependant and respondent cohabited, ii. the effect on the spouse’s earning capacity of the responsibilities assumed during cohabitation, iii. whether the spouse has undertaken the care of a child who is of the age of eighteen years or over and unable by reason of illness, disability or other cause to withdraw from the charge of his or her parents, iv. whether the spouse has undertaken to assist in the continuation of a program of education for a child eighteen years of age or over who is unable for that reason to withdraw from the charge of his or her parents, v. any housekeeping, child care or other domestic service performed by the spouse for the family, as if the spouse were devoting the time spent in performing that service in remunerative employment and were contributing the earnings to the family’s support, vi. the effect on the spouse’s earnings and career development of the responsibility of caring for a child; and vii. any other legal right of the dependant to support, other than out of public money.

74As stated in Bracklow v. Bracklow, [1999] 1 S.C.R. 231, there are three bases for spousal support: compensatory, non-compensatory and contractual. In compensatory support, the Court is directed to review the economic circumstances of each spouse’s role during the marriage. Non-compensatory support, arises when the support obligation arise from the relationship itself when the spouse is unable to become self-sufficient. It can be based on need. Under this regime, spousal support is based on economic hardship resulting from the breakdown of the marriage, and not necessarily due to the roles assumed by the parties during the marriage. The needs based support can therefore consider the recipient’s ability to become self-sufficient. The contractual basis for support is based on an agreement between the parties.

Entitlement

75Firstly, the Court must determine if the Respondent is entitled to spousal support.

76There are no facts that would suggest that there is a compensatory basis for spousal support. Both parties obtained an education during their marriage and were economically advantaged due to their education. There is no evidence that either party suffered an economic disadvantage as a result of the marriage or its breakdown.

77The Respondent’s claim for support is based on need. It was a 17 year marriage and during the last 5 years of the marriage, the Respondent relied on the Applicant’s financial support. Medical issues, arising from a work related injury, then exacerbated by a motor vehicle accident, prevented him from working.

78In reviewing entitlement to spousal support, the Court is guided by s. 33 (8) of the FLA.

79The purpose of the spousal support includes moving the dependent spouse towards financial self-sufficiency, making fair provision to assist the Respondent to become able to contribute to his own support and relieving financial hardship, if this has not been done by orders under Part I (Family Property). This allows the Court to ensure the Respondent is provided for financially yet at the same time promote his financial self-sufficiency. The Applicant has been paying spousal support for four years and supported the Respondent for five years before separation. At this point, the Respondent is not financially self-sufficient.

80Spousal support in this case will also be needed to relieve financial hardship currently afflicting the Respondent.

81The Court notes that the Respondent suffers from a myriad of health issues, some of which predate the separation. The medical reports are largely based on self-reported symptoms, and lack independent test results. He, however, has seen a number of specialists and frequented the emergency department several times. He is scheduled to attend the dizziness clinic in September. The medical reports confirm that his medical issues affect this ability to work, but do not state that he cannot work.

82The Court must also determine what, if any, steps the Respondent has taken to become financially self-sufficient.

83The Respondent has not proven that he is permanently disabled and has not applied to permanent disability under CPP or ODSP (although he claims they said he does not qualify due to his LIRA).

84The Respondent has presented no job applications, interviews or acknowledgments demonstrating efforts to find work.

85The Respondent has a contract and hence is demonstrating the ability to earn some income. Needless to say, his medical issues do not prevent him from doing some work and admits to working part-time. However, the medical issues have necessitated frequent visits to medical personnel and the hospital.

86He is still entitled to support based on need. His only source of income other than spousal support is his LIRA. However, he confirms that he does have a contract for $1,000.

87Therefore, based on the above, the Respondent continues to be entitled to spousal support.

Quantum

88In determining quantum, the Court considers the factors set out in s. 33 (9) and the SSAGs.

89In determining means and needs of the parties, the Court will consider the fact that the Applicant had a second family and assumed some of the families’ debts. A brief review of the law is set out below.

Obligations to a Second Family

[90] Obligations to a second family can be a relevant factor in considering entitlement to and quantum of support on a review. The Ontario Court of Appeal addressed the complex issue of supporting multiple families in Fisher v. Fisher, 2008 ONCA 11, at paras. 39-40: While courts generally recognize a “first-family-first” principle (which provides that a payor’s obligations to the first family take priority over any subsequent obligations, inevitably new obligations to a second family may decrease a payor’s ability to pay support for a first family. In each case, obligations toward second families must be considered in context. For example, where spouses with a child separate, and one remarries and produces another child, the obligations to the second child will affect support for the first family because the payor has an equal obligation to both children. (Citations omitted)

91In Fisher, the Court refused to reduce the support obligations to the first family, finding that the payor had voluntarily assumed responsibility for his second family (including his new partner’s children) while knowing of his pre-existing obligations. In that case, the new partner had chosen not to work, and the payor had no legal obligation to support her or her children.

92In Gray v. Gray, 2014 ONCA 659, 122 O.R. (3d) 337, at para. 45, the Ontario Court of Appeal noted that situations with second families are complex, and that in such a situation the court should not apply the SSAG wholesale. In Gray, Mr. Gray, the payor, had obligations to his second family. He had three young children with his new partner, and was the sole bread winner as his partner had had to quit her job to allow the family to move to the United States for Mr. Gray’s well-paying job. The recipient, Ms. Gray, had serious health conditions that kept her out of the workforce, perhaps indefinitely. Ms. Gray had an entitlement to support on both a needs and compensatory basis, suggesting an award at the high end of the SSAG ranges.

93The Court balanced the competing interests and settled on an amount at the lower end of the SSAGs, finding that this amount would allow Mr. Gray to meet obligations to both families, but that Ms. Gray would need to make some lifestyle choices. The Court noted that this solution may not have been possible had Mr. Gray had a more limited income. The Court refused to order arrears, citing the hardship it would cause to Mr. Gray’s new family.

94In Cotton v. Cotton, 2015 ONSC 2703, the Court rejected the payor’s claim that he could not pay more than the bottom of the range for spousal support because he needed to support his new family. Of particular importance to the court was the fact that Mr. Cotton had voluntarily assumed responsibility for his common-law wife and her two children, disregarding his pre-existing obligation to his former spouse. The family had other sources of income, including child support from the children’s father and work income from the mother. Given the high income of Mr. Cotton, and his extravagant spending, mid-range support would not constitute a hardship. The court in Cotton went so far as to state that “If the payor argues that obligation to a second family decreases his ability to pay support for a first family, there must be evidence that the payor’s obligations to his first family would impoverish his second family”.

95In Fiddler v. Fiddler, 2014 ONSC 4068, the Court rejected the argument that the payor’s obligations to his second family justified a lower amount of spousal support. The court noted that Mr. Fiddler had voluntarily assumed responsibility for his new partner and her four children, knowing of his ongoing obligations to Ms. Fiddler. As in Cotton, the court noted that there was no evidence that paying spousal support would cause significant hardship, driving the second family into poverty or onto social assistance. However, the court decided to order support at the low end of the range to account for the needs of the payor’s two children he fathered with his new partner and the high cost of exercising access.

96In Dickey v. Morrell, 2011 ONCJ 707, the Court ordered low to mid-level support, in part based on the payor’s obligations to his second family. In this case, the Judge emphasized that the new obligations to a second family may decrease a payor’s ability to pay support “particularly when the payor has his own children in the second family”.

97In Rodrigo v. Rodrigo, 2011 ONCJ 138, the Court held that an award at the low end of the SSAG ranges was appropriate. Here the Judge focused on the court’s obligation to balance the needs of each child in determining what was fair and reasonable.

98A similar result occurred in Rowe v. Piche, 2012 ONCJ 114, where the Judge decided to award spousal support at the low to mid-range to balance the competing interests of two new children in a second family with the needs of the former spouse. Here the Judge emphasized the importance of meeting the needs of the former spouse, while not penalizing the second family, specifically the payor’s new children.

99Therefore, in summary, while the general rule is that “first families come first”, Courts have recognized that obligations to a second family can decrease the payor’s ability to support the first family. The Courts consider whether the payor willingly took on the obligation (ie. decided to take responsibility for a new partner’s children), whether there is other income available for the second family, and any potential hardship to the new family.

Assumption of Family Debt

100Courts have generally approached the assumption of family debt as a reduction in the payor’s means to provide support. Some Courts have used this to find that spousal support was not appropriate, while others have found that spousal support should be reduced to account for this assumption.

101Section 33(9) (a) of the FLA requires the Court to consider the parties’ current assets and means when determine the amount and duration of a spousal support order. Courts have generally considered an agreement to assume family debts under this category, finding that the assumption of debts affects the means of the payor, reducing their ability to pay spousal support and justifying a departure from the general SSAG ranges.

102In some cases, this has resulted in Courts finding that a spouse is unable to provide support. For example, in Mintz v. Mintz, 2013 ONCJ 382, at paras. 70-71, the Court considered payor’s assumption of family debt along with his lack of assets to determine that a spousal support order would be inappropriate.

[103] Some Courts have considered the assumption of debt not only as reducing the payor’s ability to pay, but also as providing a benefit to the recipient that can substitute for support. In Trottier v. Prud’homme, 2012 ONCJ 641, at para. 16 the court wrote that The Respondent has assumed the full burden of paying the parties’ debts which are not insubstantial. By doing so, she is in a reduced position to pay spousal support and the Applicant, in effect, gets the benefit of her making those payments. That financial benefit should be received in lieu of spousal support payments.

104Other Courts have held that the assumption of debt should be considered when calculating the appropriate quantum of spousal support. The size of the debt is of great importance when considering its impact. In Wiebe v. Gushulak, 2012 ONSC 2294, at para. 15, the Court held that the relatively minor debt did not justify a departure from the standard SSAG ranges.

105In Dunn v. Dunn, 2014 ONSC 6899, at para. 32, 39-40, Justice Hennessey had found that the significant debts of the family justified a departure from the standard SSAG formulas. Justice Hennessey reduced the income of the payor to account for the costs of servicing the debt. The SSAG range was then based off of this new income.

106Justice Gareau’s review order in Dunn v. Dunn, 2014 ONSC 7277, at para. 30, emphasized the importance of the size of the debt on the support calculations. Justice Gareau found that that where the debt has been substantially reduced by the time of the review, it would have a reduced impact on the spousal support calculations at that time, as it would have less of an impact on the means of the payor. Here, Mr. Dunn had reduced the debt of $221,000 to one of $70,000 by the time of the review. Even though his income had dropped over that time period, the reduced debt load justified maintaining the same level of support.

Imputation of Income to the Respondent

107The Applicant wishes to impute income but did not present case law on the imputation of income. Implicit in her argument is that the Respondent should be financially self-sufficient.

[108] The relevant provisions in the Child Support Guidelines, S.O.R./97-175, as amended (“Guidelines”) are as follows 19(1) The Court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following: (a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;

109This section has been equally applied in spousal support cases.

[110] In Drygala v. Pauli (2002), 61 O.R. (3d) 771, at para. 23, the Ontario Court of Appeal set out the test for determining whether income should be imputed: (i) Is the spouse intentionally under-employed or unemployed? (ii) If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs? (iii) If the answer to question #2 is negative, what income is appropriately imputed in the circumstances?

111The onus is on the party seeking to impute income to show a prima facie case by establishing the evidence that the other party is intentionally under-employed or unemployed. Intentional, given its ordinary meaning, “means a voluntary act”: Drygala, at para. 28; and Homsi v. Zaya, 2009 ONCA 322, 65 R.F.L. (6th) 17, at para. 28.

112The Court must ask whether the evidence establishes that the payor has made a personal choice to earn less than he is capable of earning: Riel v. Holland (2003), 61 O.R. (3d) 417 (C.A.). There is no requirement for a finding that the payor has acted in bad faith and with a specific intent to avoid child support obligation.

113The second step is treated as a general test of reasonableness that goes beyond the educational needs of the parent. Once intentional underemployment is shown, the onus shifts to the payor to demonstrate that the decision is reasonable.

114Finally, when imputing income, in Lawson v. Lawson (2006), 81 O.R. (3d) 321 (C.A.), at para. 36, the Court stated that when determining imputation of income, the Court must consider what is reasonable in the circumstances, having regard to the age, education, experience, skills and health of the payor and the payor’s past earning history and the amount of income the payor could earn if he/she worked to his/her capacity.

115However, he has not worked full time for 9 years and it appears that his medical issues may affect this ability to work full time. He has a contract and hence has established that he is capable of working, although he states that his medical needs impede his opportunities to find lucrative employment. The Respondent has not put forth a plan of what he is going to do regarding jobs or retraining. It appears that dealing with the myriad of health issues has occupied his time.

116The Respondent continues to have medical problems although there is no report saying he can never work. There is no application for CPP disability. Nevertheless, the reports show that in the past 2 years, he has frequented hospitals and specialists for his cardiac issues, vertigo, pulmonary and other health issues. No formal diagnosis has been attained and he is attending the dizziness clinic in September 2016.

117Therefore, the Applicant has not shown that the Respondent is intentionally underemployed.

118The Court declines to impute income to the Respondent.

Analysis

119In determining the quantum of spousal support, the Court has considered the following factors:

• basis for spousal support: compensatory or non-compensatory;
• length of the relationship;
• efforts made by the spouse to become self-sufficient;
• reasonableness of the efforts given his education and work experience;
• are they biological children or is the payor taking on the responsibility of step-children?
• is there financial hardship to either of the parties?
• is there an evidentiary basis for the inability not to be fully employed;
• are there exceptions outlined under chapter 12 of the SSAGs such as debts?
• how long has the recipient been supported by the payor?;
• is there a diagnosis of disability? If so, has there been an application to CPP disability?;
• voluntary assumption of new family, as opposed to having new biological children;
• availability of other support/income in second family;
• potential hardship to new family; and
• overall fairness.

120The parties were in a marriage of 17 years, they accumulated debts during the marriage, lived with her parents for 13 years due to their limited funds and sold their house at a loss.

121It is noted that both parties completed post-secondary education during marriage, and there is no evidence that either party’s earning capacity was affected by the responsibilities they assumed during the marriage.

122The payor has a legal obligation to her second family – these are her biological children – and she has not voluntarily assumed responsibility for her partner, who is employed. Her obligations to the children of her new relationship will have to be considered in calculating support for the Respondent.

123The Applicant earns $89,000 per year and when she returns to work she will be paying full time daycare for two young children. Her fiancé earns $20,000 which will supplement the family expenses.

124The Respondent is living in very small quarters and barely making ends meet. The Applicant is also struggling financially.

125Neither party has assets except their pensions. Both have significant debts income The Respondent’s income is $1000 to date. There is no information if he will have other contracts the rest of the year.

126The SSAGs suggest $1,369 in the low range and $1,825 per month in the high range using the income of $89,000 for the Applicant and $1000 per month.

127The SSAGs are not binding or legislative. Nevertheless, they are a very useful tool that the Court must consider in determining quantum of spousal support.

[128] The Court is departing from the formula ranges in this case for the following reasons: i. she is servicing the debts from the marriage; ii. she has a second family with two infants needing her financial support; iii. the Respondent needs to move towards financial independence including determining with certainly his medical needs and then move towards full time work, if possible; and iv. the parties themselves recognized the fairness of departing from the SSAGs ranges in their agreement when they permitted the Applicant to pay less than the SSAGs ranges as she was assuming the joint debts.

129The SSAGs Guide, Chapter 12, set out “exceptions” recognized as grounds for departure from the formula ranges. However, the exceptions are not meant to be exhaustive as the authors acknowledge that there could be other exceptional circumstances which would require a departure from the ranges from the SSAGs.

130The exceptions include debt payments, illness, and meeting basic needs/avoiding hardship (in shorter marriages). The exceptions are not meant to be exhaustive.

131Here, unlike Fisher, the Applicant is supporting her own biological children. Mr. Fisher’s new partner could retrain as a physiotherapist but preferred to stay at home. Here, the Applicant’s partner is working and earning minimum wage. In addition, Mr. Fisher’s income was substantial at $140,000 at the time of the hearing.

[132] The two broader principles that are relevant here are:

1. despite the “first-family-first” principle, Justice Lang states that “inevitably new obligations to a second family may decrease a payor’s ability to pay support for a first family”; and:
2. at para. 40, Justice Lang states that when the payor remarries and produces another child, the context will be different and “the obligations to the second child will affect support for the first family because he payor has an equal obligation to both children.”

[133] In Gray, the Ontario Court of Appeal stated at para. 45: In some cases, there are complicating factors that must be considered before a court applies the SSAG wholesale. Complicating factors that courts ought to consider include variations based on the post-separation income increase of the payor, or situations with second families. In such cases, the court must conduct an analysis of the facts of the specific case to assess whether the SSAG ranges are appropriate.

134The Applicant has two children. The Respondent’s medical condition remains uncertain and the debts continue to exist. The financial picture of both parties has worsened since separation. This has been exacerbated by the Respondent’s ongoing health issues and the wife taking on new financial responsibilities. The Respondent needs support. The Applicant has less ability to pay at this time than when the agreement was made. Paying the support in the range would impoverish her family.

135The Court finds that this case falls within the exception as the Applicant is carrying ½ of his joint debts, paid for the loss of the sale of the matrimonial home and his debt of over $5,000.

136Here, the Respondent does not have a compensatory claim to his support.

137It is in the best interests of her new family and her ex-husband that she work and in working she is obliged to arrange daycare.

138The Applicant’s partner’s low income is a factor as the Applicant, as high income earner, carries the financial burden of the family.

139Here, there is not enough money to go around. The Applicant’s obligation to the Respondent must be viewed in light of her obligations to her new family.

140Given the payor’s new family obligations and the birth of her two biological children, the recipient must be encouraged and nudged to work towards self-sufficiency. Of course, this will be subject to the final diagnosis and whether this affects his ability to find work.

141On September 1, 2016 when the Applicant returns to work her income will return to $89,000, but her daycare costs will be $20,640, of which some attracts tax deductions.

142Therefore, commencing September 1, 2016, the Applicant will pay spousal support the amount of $1000 per month.

(ii) Does the Applicant’s new family status constitute a material change of circumstances for the purposes of retroactive spousal support?

Legal Principles

143Generally speaking, a finding of material change of circumstances requires a finding that the changed circumstances were not foreseeable at the time the agreement was entered into: Innes v. Innes (2005), 15 R.F.L. (6th) 187 (Ont. Div. Ct.). In accordance with Willick v. Willick, [1994] 3 S.C.R. 670, material change means a change such that, if known at the time, would likely have resulted in different terms.

Analysis

144The parties restricted the definition of a material change of circumstances in their agreement, i.e. “if there is a material change in either of our health circumstances that prevent us from working full time”.

145Do the Applicant’s pregnancies and the births of her two daughters constitute a material change in her health circumstances?

146The parties did not define “health circumstances”. It is modified by the words “prevent us from working full time”.

147The Applicant argues that having the two children constituted a change in her health resulting in her unemployment.

148The Respondent’s position is that he will accept less support while she is on maternity leave. Implicit in this concession is that the Respondent is confirming that he recognizes that the unemployment during maternity leave is a material change and hence a valid reason to reduce the level of support.

149However, he is not prepared to agree that the material change would result in a reduction of spousal support payable to him once the Applicant returns to work full time. In fact, he is requesting a higher level of spousal support.

150Given that the parties had agreed to a review after May 2016, the issue of material change of circumstances is, therefore, only relevant with respect to the retroactive adjustment of spousal support.

151Therefore, the court finds that the Applicant’s change in health prevented her from working full time so that the Court can retroactively vary the spousal support.

152The Applicant’s income for 2014 was $63,449 according to her NOA, her income for 2015 was not shown but given the same period of working as in 2014 is estimated at $63,449 (6 months unemployed), and income in 2016 is estimated at $74,880 according to her financial statement sworn February 2, 2016.

153During 2015, and 2016, the Respondent was not working. His sole sources of income were spousal support and monies from LIRA.

154In concluding that retroactive support is appropriate, I have considered the principles identified in D.B.S. v. S.R.G., 2006 SCC 37, [2006] 1 S.C.R. 231:

• notice – the application was issued August 2015, but the court accepts that the Applicant approached the Respondent early in 2015 and the Respondent filed the agreement in May 2015;
• hardship – the Applicant has a second family while the Respondent is unemployed;
• needs of the Respondent – the Respondent is financially in need and is living on limited income;
• any blameworthy conduct of the payor- there has been no improper conduct, as the Applicant brought the application and contacted the Respondent to try to resolve matters before instituting court action.

155The SSAGs range is as follows: low range is $1348 per month and the high range is $1798 per month.

[156] As discussed in more detail above, the court had considered SSAGs but is not prepared to apply them in this case. The court takes into consideration the following: i) the Applicant took on the family debts which is an enumerated exception set out in Chapter 12 of the SSAGs Revised User’s Guide and agreed to by the parties in their agreement; and ii) the financial hardship to the Applicant and her family if she pays spousal support in the range.

157Therefore, from January 1, 2015 to September 1, 2016 inclusive, support is payable by the Applicant to the Respondent in the amount of $800 per month which is below the low end of the SSAGs.

Duration

158The SSAGs suggest a minimum duration of 8.5 years. It has been only 4 years from separation. No final diagnosis has been determined. Without a diagnosis, a prognosis is also not available.

159This leaves the court in the dark regarding the future employability of the Respondent. Therefore, it is premature to terminate spousal support.

160This is an appropriate case for a review of the Respondent’s circumstances in approximately two years. The Respondent will need to make concrete efforts to determine his health issues and then, if possible find full time work. He has a duty to make reasonable efforts to become financially self-sufficient and the next two years will allow him amply time to plan his financial future.

161By June 1, 2018, the information regarding the Respondent’s final diagnosis of his medical condition and prognosis.

162In addition, it will then have been 6 years from the separation and more certainty with respect to his future. At the time the Applicant’s girls will be 2 and 4 years old and she will continue to have ongoing expenses.

163If parties are unable to agree on the issue of costs, then the Applicant must provide her 2 page written submission by June 21, 2016 and the Respondent can respond with his 2 page submissions by June 30, 2016.