Superior Court of Justice – Ontario

COURT FILE NO.: FS-12-0331 DATE: 2017-04-25

B E T W E E N:

Laura Jane Shepstone Unrepresented Applicant

• and -

Lorne William Shepstone Unrepresented Respondent

HEARD: April 10, 2017, at Thunder Bay, Ontario Madam Justice H.M. Pierce

Reasons for Judgment

Introduction

[1] The applicant wife commenced a proceeding for divorce, child support, spousal support and other relief. By the time the case reached trial, a number of issues had been resolved. However, the parties raised issues at trial that were not raised at the trial management conference. The result was chaotic.

[2] In the beginning of the litigation, both parties had lawyers. Unfortunately, by the time of trial, neither party had a lawyer. Effective legal advice would have expedited financial disclosure and likely prevented a trial.

[3] Equally unfortunately, neither party had any real idea how to present his or her case. Neither party had a clear understanding of what issues remained to be tried, despite the enumeration of these issues in Mr. Justice Fitzpatrick’s trial management endorsement dated January 13, 2017. Nor did either party have any idea about how to prove or defend the claims.

[4] Mr. Shepstone’s lawyer at the time served an Answer but for some reason, it was never filed in the court file. The parties’ proof of income was dated, incomplete or non-existent. Furthermore, no trial record was filed. The evidence on most issues was scant.

[5] Ms. Shepstone indicated at the start of trial that she did not wish to proceed with her claim for divorce. No marriage certificate could be found in the court file. The respondent, Mr. Shepstone did not claim for divorce. Accordingly, the claim for divorce is dismissed.

[6] Ms. Shepstone advised that the parties had sold the matrimonial home and settled all property issues. However, at trial, she made a claim for a division of Mr. Shepstone’s pension, an issue that was not raised at the trial management conference. The pension was not valued and no net family property statement was filed by either party.

[7] Ms. Shepstone wanted an interim order for sole custody in her favour finalized. Mr. Shepstone advised that he wanted joint custody, to which his wife objected. Provisions for access are satisfactory as they coincide with Mr. Shepstone’s time off work.

[8] Mr. Shepstone is content that the existing order for child support continue at $1,187 per month. Retroactive child support for the period November, 2010 to April, 2013 was settled at the trial management conference. The husband was then ordered to pay the sum of $18,772 for November, 2010 to April, 2013, with a credit of $6,000 on account of sums paid. Although the credit is specified in the order, Mr. Shepstone did not understand this to be so.

[9] Ms. Shepstone raised the issue of retroactive and on-going s. 7 expenses at trial. Mr. Shepstone offered to pay half of the child’s section 7 expenses.

[10] Mr. Shepstone asks the court to terminate his wife’s spousal support on November 19, 2017 and fix retroactive spousal support at a reduced rate. Ms. Shepstone seeks orders for retroactive and on-going spousal support. At the trial management conference, she advised Justice Fitzpatrick that she proposed her spousal support would terminate in November, 2019. She mistook his endorsement in that regard for an order of the court.

Custody

[11] In order to bring some organization to this case, I will begin at the beginning.

[12] The parties began living together in 2003 and married on May 19, 2005. Their daughter, Mikalah Leah Phyllis Regina Shepstone was born on June 4, 2005. The parties were living at Red Lake, Ontario when they separated on November 19, 2010. Upon separation, Ms. Shepstone moved to the Thunder Bay area with the child. The father moved to Thunder Bay in the last year to be closer to the child, and he is involved in her activities, as is the mother. It is obvious that both parents love their daughter.

[13] Now that Mr. Shepstone is nearby, he exercises access to the child in conjunction with his work schedule 12 days per month on an overnight basis. Both parents find this schedule works well and no change is proposed. Each of them lives alone with the child. The father has recently found larger accommodations to better care for the child.

[14] Ms. Shepstone indicated that Mr. Shepstone has not been involved in decisions involving the child because discussions with him are “impossible” and so joint custody should not be ordered. However, she stated that she keeps him informed about the child’s activities.

[15] For his part, Mr. Shepstone complains that his wife flies off the handle when he does try to discuss matters with her. Communication between the parents is by way of text, notes, or telephone conversations.

[16] Despite the conflicts between the parents, it is evident that they have been able to cooperate on the time Mikalah spends with each parent and the appropriate extra-curricular activities for her. No complaint was made about sharing of holidays during the six years since separation. They have created a workable method of joint care now that Mr. Shepstone lives in the area.

[17] In my view, the child’s interests are best served by her parents sharing her custody, which includes decisions made on her behalf. They have evolved a system of care that seems to meet the child’s needs, to the credit of both of them.

[18] Therefore, the parents shall have joint custody of Mikalah Shepstone, with the child to reside with her father when he is not working (based on the present regime of 12 days per month) and the balance of the time, the child shall reside with her mother. The parents shall share equally the child’s annual holidays and school vacations as they occur from time to time. The child is entitled to have telephone communication with each parent in accordance with her wishes, provided that such conversations do not interrupt the child’s routine.

[19] Each parent shall speak respectfully about the other parent in the presence or hearing of the child. If the child is travelling outside the Thunder Bay area with either parent, he or she shall provide the other parent with a written itinerary in advance of travel, including an emergency contact number. If consent is required for international travel, it shall not be unreasonably withheld.

[20] Each parent is entitled to be present at the child’s activities, and shall share information concerning the child’s educational, medical and social needs and activities.

Child Support

[21] Mr. Shepstone’s time with the child, on a monthly basis is just under 40 %. Currently he is paying child support of $1,187 per month, an amount that was fixed by interim order of Mr. Justice Shaw on April 26, 2013. His income for 2016, as proven by his income tax return, was $142,409.11.

[22] Based on the table amount for that income in the Child Support Guidelines, the amount of child support shall be adjusted upward to accord with his present income.

[23] Mr. Shepstone is ordered to pay to Ms. Shepstone child support of $1,206 per month, commencing May 1, 2017.

[24] Commencing in 2018, each party is required to exchange annually copies of his or her income tax returns and notices of assessment no later than June 1. Child support will be adjusted on July 1 of each year, unless there is a material change in the employment or income of either party before that time.

Spousal Support

[25] For the purposes of this discussion, I find that Mr. Shepstone’s annual income is $142, 409.11, as proven by his income tax return for 2016.

[26] Ms. Shepstone claims that she is wholly dependent on Mr. Shepstone for her support. She says this has been the case since the parties began living together. Although she complained about her husband’s failure to make timely financial disclosure, she did not file any tax returns herself. She simply filed a hand-written summary of what she believed her income to be, starting in 2003. She said her income for 2016 was “unavailable.”

[27] Ms. Shepstone’s financial statement tendered at the start of trial was current but unsworn. It showed income from all sources for 2016 at $71,643.52. This income included a lump sum from an unspecified source of $38,427. For the current year, she projected annual income of $46,994.04, based on child and spousal support and the universal child benefit.

[28] Ms. Shepstone enjoyed a week’s vacation with the child in Mexico last year and has made plans for another vacation with the child this year. In addition, she has enjoyed out of country travel at the expense of others in the last couple of years. Her financial statement showed conventional expenses generally. However, the car loan payment for her 2016 Jeep Wrangler was listed at $750 per month. In addition, her credit card debt payments are claimed at $500 per month against $9,100 in consumer debt.

[29] Ms. Shepstone filed no medical evidence with respect to her inability to work. She testified that she takes medication for depression and anxiety and is being monitored for indications of breast cancer. She says that her daily routine revolves around maintaining the rural home and property in which she and the child live and attending doctors’ appointments.

[30] She is a high school graduate. When the parties met, she was taking a personal support worker course but did not finish due to health issues.

[31] Last October, Ms. Shepstone obtained a security guard certificate. She stated in her evidence that she was not confident that she could hold a job. Mr. Shepstone testified that his wife had various jobs during the marriage.

[32] Mr. Shepstone was an apprentice mechanic when the parties met, earning $30,000 a year. Currently he is an underground mechanic, employed as a supervisor at the Gold Corp. gold mine in Red Lake. His income has risen substantially since he was an apprentice. However, he is currently in financial straits, such that he has filed a creditor proposal with a trustee in bankruptcy. The terms of the proposal are that he pay $36,000 over a period of three years.

[33] The first spousal support order was made by Mr. Justice Shaw on April 26, 2013. The order required Mr. Shepstone to pay spousal support of $3,440 per month commencing December 1, 2012. That order was indexed in accordance with changes in the Consumer Price Index. The order was made without prejudice to any claims for retroactive spousal support.

[34] Next, on June 13, 2016, Mr. Justice Fitzpatrick reduced spousal support to $2,500 per month commencing July 1, 2016. Mr. Shepstone was also ordered to reinstate his wife as a beneficiary of his workplace benefit package.

[35] Mr. Shepstone asks the court to terminate spousal support on November 19, 2017, the seventh anniversary of their separation. His position is that he will have paid spousal support for the same duration as the relationship.

[36] Mr. Shepstone indicated that he helped his wife at the start of their relationship when she was in need. He agreed that she would remain on his health benefits through work.

[37] In closing submissions, Ms. Shepstone stated that she took care of the husband’s home and child and helped him acquire the skills that support his income-earning capacity now. Therefore, she expected him to support her. However, she stated that she is willing to take on a part-time job and estimated that she would earn minimum wage which she put at $10 per hour. In fact, the current minimum wage in Ontario is $11.40 per hour.

[38] I am mindful that, in the last year, Mr. Shepstone has assumed the care of the child 12 days per month, leaving Ms. Shepstone substantial time when she is free of child care responsibilities. When the parties separated, Mikalah was five years old. At that age, having moved to a new city, and without any real assistance with child care that the father now provides, the mother assumed primary care of the child.

[39] Mikalah is now almost 12. She is undoubtedly more settled and independent. She spends substantial time with her father. It is time for Ms. Shepstone to become financially more independent. She is young enough that she could upgrade her skills and establish herself.

[40] That said, there is a considerable income disparity between the parties, and Ms. Shepstone will need support while she transitions to an independent lifestyle. While she has been supported by her husband, she has shown little initiative to explore even part-time work or moderate her expenses. At the time of trial, she was 45 years old. She has, potentially, twenty years of earning ahead.

[41] The onus is on the party seeking spousal support to prove his or her income. As Ms. Shepstone has not done so, the court is entitled to draw an adverse inference.

[42] I agree that Ms. Shepstone is capable of earning at least a minimum wage. I impute to her income, based on 40 hours per week x $11.40 per hour = $456 per week. Allowing for 50 weeks per year, she is capable of earning at least $22,800 annually.

[43] In order to allow Ms. Shepstone some time to search for employment or to embark on a program of retraining, spousal support will continue at the existing rate of $2,500 per month until August 31, 2017. Commencing September 1, 2017, spousal support shall reduce to $2,000 per month.

[44] In September 1, 2018, spousal support shall further reduce to $1,500 per month. Thereafter, either party may apply to the court for a review of the need for spousal support and the ability of the husband to pay, as well as any other relevant circumstances.

[45] In addition, Mr. Shepstone is ordered to maintain Ms. Shepstone on any health and dental benefits available to him through his employment so long as he is required to support her, and provided she is eligible for such coverage under the terms of his plan. He shall make all drug and health cards available to Ms. Shepstone in order to ensure she can access such coverage.

Retroactive Spousal Support

[46] Ms. Shepstone seeks an order for retroactive spousal support in the amount of $84,108 from November, 2010 to November, 2012, some 6.5 years before trial. Her claim is based on a requested order of $3,541 per month for November and December, 2010, the sum of $3,425 per month in 2011, and $3,266 per month from January to November, 2012. It is her position that the husband refused to pay spousal support.

[47] As I have already noted, Ms. Shepstone did not file proof of her income since separation.

[48] Mr. Shepstone submits that he cannot afford to pay retroactive spousal support in the amount claimed. Currently he is paying $12,000 per year for the next three years on a creditors’ proposal.

[49] In a case called Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, the court discussed claims for retroactive spousal support. The court considered the needs of the recipient, the conduct of the payor, the reason for delay in seeking support and any hardship that a retroactive order would cause the payor spouse (see: para. 207).

[50] The court in Kerr differentiated the legal underpinnings for retroactive claims for child support from those for retroactive spousal support. It commented at para. 209:

Where, as here, the payor’s complaint is that support could have been sought earlier, but was not, there are two underlying interests at stake. The first relates to the certainty of the payor’s legal obligations; the possibility of an order that reaches back into the past makes it more difficult to plan one’s affairs and a sizeable “retroactive” award for which the payor did not plan may impose financial hardship. The second concerns placing proper incentives on the applicant to proceed with his or her claims promptly (see D.B.S., at paras. 100–103).

[51] The court concluded in Kerr that the start of proceedings provided clear notice to the payor that support was being sought so that he could plan his financial affairs accordingly (para. 210).

[52] In MacKinnon v. MacKinnon, (2005), 75 O.R. (3d) 175 (Ont. C.A.), the court considered notice relative to a claim for spousal support. At para. 22, it identified a request for financial disclosure as ordinarily triggering claims for spousal support. It said:

Absent any unusual reason arising from the factors and objectives set out in the Divorce Act, an applicant who requests financial disclosure in preparation for the negotiation or litigation of a support claim, and who then proceeds reasonably to a disposition of the claim, presumptively is entitled to prospective support from the date of notice that a support claim is being pursued.

[53] Here, the application in this proceeding was issued on October 23, 2012, nearly two years after separation. Service of the application was not effected until December 1, 2012. Ms. Shepstone was represented at that time.

[54] There is no evidence about a demand for spousal support or financial disclosure being made before the application was initiated. There is also no evidence about the wife’s income or need for support during the two year period before the application was commenced, including her income or assets, the husband’s circumstances, or his assumption of matrimonial debt. There is no evidence of wrong-doing on the part of the husband.

[55] In the absence of evidence of a demand for spousal support before the application was issued and proof of circumstances to justify an award of $84,000, I am not inclined to make such an order. It is likely to generate hardship for the payor spouse. A litigant should not be encouraged to sit on her hands without claiming relief and then argue that a retroactive order should be made because she needed the relief.

[56] The trial was held 6.5 years after separation. I am not satisfied that the husband is now in a position to pay such a large sum on account of retroactive spousal support and still maintain his ongoing obligations for child and spousal support, as well as retroactive child support previously ordered. The claim for retroactive spousal support is dismissed.

Special or Extraordinary Expenses

[57] Section 7 of the Child Support Guidelines authorizes a court to make an order for the payment of special or extraordinary expenses for a child in addition to payment of the table amount of child support, having regard for the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense when the incomes of the parents’ and the family’s pattern of spending before separation is considered. These expenses include:

• child care expenses in specified circumstances;
• medical and dental insurance premiums attributable to the child;
• health-related expenses that are not reimbursed and exceed $100 per year;
• extraordinary expenses for primary or secondary school education or other educational programs to meet the child’s needs;
• expenses for post-secondary education; and
• extraordinary expenses for extracurricular activities.

[58] Subsection 7 (2) describes the principle for payment of these expenses: that the expense is shared by the parents in proportion to their respective incomes after deducting from the expense any contribution made by the child.

[59] Mr. Shepstone testified that the child is listed on his health care benefits available through his employment. There is no evidence of additional health-related claims for the child at this point. Mr. Shepstone is ordered to maintain the child on any health and dental benefits available to him through his employment so long as he is required to support her, and provided she is eligible for such coverage under the terms of his plan. Further, Mr. Shepstone is ordered to cooperate with Ms. Shepstone in requesting that his health care insurer set up a separate account so that Ms. Shepstone may deal with the child’s claims under the plan directly with the insurer.

[60] Ms. Shepstone claims for the following anticipated extracurricular expenses for the child in the current year:

• swim membership $118.38
• summer camp $150.00
• gymnastics (begins in September) $1,000.00 Total $1,268.38

[61] Mr. Shepstone indicated that he thought the child’s special expenses would be paid out of the monthly child support payment. He also indicated that he paid towards Mikalah’s dance expenses.

[62] Section 7 (1.1) (a) of the Child Support Guidelines defines “extraordinary expenses” as:

expenses that exceed those that the spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that spouse’s income and the amount the spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate….

[63] In Rains v. Rains, [1997] O.J. No. 2516 (Ont. Gen. Div.), the court defined “extraordinary” as meaning activities for which the cost is disproportionately high in relation to the payor’s income, which would not be included in the usual allowance for recreation that is part of the table amount.

[64] The Ontario Court of Appeal explained it this way in Titova v. Titov, 2012 ONCA 864: “the use of the word ‘extraordinary’ in s. 7 implies that ordinary expenses are intended to be covered by the basic table amounts.”

[65] In this case, I agree that the extracurricular activities are necessary in relation to the child’s best interests. As well, they are reasonable in relation to the combined incomes of the parties. The expenses for swim membership and summer camp are modest in relation to the monthly child support that has been paid and the adjusted support to be paid commencing May 1, 2017. In my view, these are expenses that the mother can reasonably be expected to cover out of the child support. Therefore, I conclude that they are not extraordinary.

[66] However, the expense for gymnastics, at $1,000 per year, is in a different category. It is extraordinary in the sense that the mother could not be expected to cover it out of the child support payable by the father.

[67] Sections 2 and 3 of Schedule III of the Child Support Guidelines stipulate that child support, a universal child care benefit, and spousal support are not to be taken into consideration for purposes of calculating income for purposes of child support liability.

[68] I have imputed income of $22,800 annually to Ms. Shepstone as of September, 2017. The full burden of paying Mikalah’s gymnastic expense should not fall on Mr. Shepstone.

[69] Section 7 (2) of the Child Support Guidelines provides that the guiding principle for the payment of s. 7 expenses is that the expense is shared by the spouses in proportion to their respective incomes after deducting any contribution from the child.

[70] When the spouses’ incomes are combined ($142,409 + $22,800 = $165,209), Mr. Shepstone earns 86% of the parties’ combined income and Ms. Shepstone will earn 14% based on her imputed income.

[71] Mr. Shepstone is therefore ordered to pay to Ms. Shepstone, on account of s. 7 expenses (gymnastics) the sum of $71.66 per month commencing September 1, 2017. Ms. Shepstone shall pay the balance, which equals $11.60 per month. Should it occur that the child enrolls in some other activity than gymnastics where the expense is equivalent, the same amount of support is payable, to be applied to a comparable recreational expense for Mikalah.

[72] Ms. Shepstone also claims for retroactive s. 7 expenses for the child. She claims $511.00 for 2014; $258.38 for 2015; and $502.58 for 2016. The most expensive activity is $384 for dance. March break or summer camp expenses are about $150 per session. In my view, none of these expenses are extraordinary under the criteria discussed above. The claim for retroactive s. 7 expenses is dismissed.

Security for Child and Spousal Support

[73] Mr. Shepstone has life insurance available to him, through his employment. He proposes that his sister be the trustee of this plan. In my view, having his sister as trustee instead of Ms. Shepstone leaves potential for delay and misunderstanding in accessing the policy should it be necessary. No reason has been advanced to indicate why Ms. Shepstone should not be the trustee. If she is still receiving spousal support at the time of Mr. Shepstone’s death, she will also require security for her own support.

[74] Accordingly, Mr. Shepstone is ordered to maintain Ms. Shepstone and the child as beneficiary on his life insurance policy available through work, so long as he is required to support either of them. Ms. Shepstone shall be shown as the trustee for the child’s interest. Upon any reasonable request made by Ms. Shepstone, Mr. Shepstone shall provide proof of such coverage and beneficiary designation within thirty days.

Pension Division

[75] At trial, Ms. Shepstone sought an order dividing her husband’s pension accrued in the five years from marriage to separation. Ms. Shepstone’s summary of her husband’s income and employment shows him as being employed with Gold Corp. at some point during 2009 and continuing until 2010, which was the year of separation.

[76] Currently, Mr. Shepstone is employed with Gold Corp. Mining. There is no specific evidence that Mr. Shepstone has a pension plan with Gold Corp. However, inasmuch as Mr. Shepstone acknowledged having health benefits and life insurance through his current employer, I infer that he also pays into a pension plan. If Ms. Shepstone’s summary of his employment history is correct, Mr. Shepstone would have paid into a pension plan for less than two years prior to separation.

[77] There is no evidence whatsoever that he paid into a pension plan when employed with Western Star where Ms. Shepstone says he worked at the time of their marriage and until 2007, nor with Tramin Contracting where she says he worked during 2008.

[78] Ms. Shepstone indicated in her evidence that the parties had divided their property. Neither party filed a net family property statement. Thus, it is not possible to know what debts were paid and by whom, and what assets were retained by each spouse in order to calculate equalization of net family property.

[79] Because Ms. Shepstone is seeking the order for pension division, the burden is on her to prove her entitlement to this relief. Based on the incomplete evidence before the court, she has not done so. The claim for pension division is dismissed.

Bankruptcy

[80] Ms. Shepstone seeks an order that, in the event of the husband’s bankruptcy, the husband’s discharge in bankruptcy shall be suspended pending the court’s order, in order to permit the wife to permit division of the husband’s pension plan in specie.

[81] For the reasons set out above, no pension division is ordered. However, there are other reasons to refuse this claim.

[82] Mr. Shepstone has made a creditors’ proposal. He has not made an assignment in bankruptcy. The case before this court stems from the Divorce Act, not the Bankruptcy and Insolvency Act. In hearing this case, this court does not sit as a Bankruptcy Court. Accordingly, there is no jurisdiction to order the stay that Ms. Shepstone seeks.

Costs

[83] If either party intends to claim costs, he or she must obtain an appointment to argue costs from the trial coordinator within thirty days of the release of these reasons for judgment, failing which costs will be deemed to be settled.

[84] Costs submissions are not to exceed five pages, in addition to offers to settle or bills of costs.

The Hon. Madam Justice H.M. Pierce Released: April 25, 2017