CITATION: Kirvan v. Kirvan, 2017 ONSC 5560
COURT FILE NO.: FC-12-2817
DATE: 2017/09/20
SUPERIOR COURT OF JUSTICE
BETWEEN:
Mary Anne Kirvan
Applicant
– and –
Myles John Kirvan
Respondent
Philip Augustine, Counsel for the Applicant
Pam MacEachern, Counsel for the Respondent
HEARD: In Writing
AMENDED REASONS FOR JUDGMENT
Shelston J.
[1] By judgment dated December 9, 2016, I released my reasons for judgment in this matter. Subsequent to the release of my reasons for judgment, the parties made a request to clarify or correct parts of my reasons for judgment.
[2] I received correspondence from the respondent’s counsel on February 16, 2017, in which the respondent sought clarification of certain issues regarding his obligation to maintain life insurance. Specifically, he raised three points:
a. In my reasons for judgment, I found that the respondent’s death benefit was equal to two times a salary through his employment, the principal amount of which is reduced by 10% each year starting in 2013. Counsel submits that this was an error as the principal amount is not reduced until the respondent attains 66 years of age on January 9, 2020. The respondent’s current death benefits are $511,000. As a result of my decision, the applicant is the beneficiary of $711,000 of life insurance which is more than the applicant requested.
b. The reasons for judgment did not include a provision that would permit the respondent to periodically reduce the amount of life insurance as the spousal support obligation was reduced without the requirement of returning to court and demonstrating a material change in circumstances.
c. The reasons for judgment ordered the respondent’s support obligation to be a first charge on his estate. Counsel for the respondent submits this is an oversight in that the reasons did not include that the first charge would only be applicable in the event that the required life insurance was not in place at the time of the respondent’s death to ensure that the life insurance provisions should not over insure the support obligation nor result in a windfall to the applicant in the event of the payor’s death.
[3] By letter dated February 20, 2017, then counsel for the applicant, addressed the issues of the amount of life insurance coverage and securing the spousal support against the estate of the respondent and raised the issue of indexation of spousal support. Specifically, the applicant indicated that three issues needed rectification:
a. The reasons for judgment do not deal with the issue of indexation although it was raised by the applicant in her submissions. The position of the applicant was that the spousal support should be indexed annually to the cost of living.
b. The applicant admitted that the current death benefit of $511,000 does not start to be reduced until the year 2020, at which point it is reduced by 10% each year. The applicant made two submissions. Firstly, that if it was the intention of the court to specify an amount over and above the $200,000 Canada Life policy, the applicant had no objection to the court indicating the amount to be designated from the death benefit. Alternatively, if the court was indicating that the current amount of life insurance to be secured was $365,290, she agreed to the inclusion of an additional clause to the effect that the amount of life insurance coverage would be varied from time to time as the amount of support payable over time diminishes. She did not agree to any more specific terms and indicated a material change might be required to seek an increase in the coverage if the spousal support increased.
c. With respect to the order that the respondent’s support obligation be a first charge on the respondent’s estate, the applicant submitted that the court did not make a mistake with respect to the inclusion of that order. Any issue with respect to this order is a matter of appeal and not correction of a mistake.
[4] During a conference call on March 2, 2017, a schedule for the exchange of submissions was ordered. During a conference call on March 2, 2017, counsel advised that there were five issues that needed to be addressed:
a. security for future spousal support payments;
b. the quantum of life insurance and whether the coverage ordered exceeds the support obligation;
c. whether there should be a periodic reduction in the life insurance as the amount of security for spousal support reduces overtime;
d. whether unpaid spousal support should be a first charge on the estate of the respondent; and
e. indexation of spousal support.
[5] By June 30, 2017, I received all submissions.
Respondent’s Position
[6] The respondent, in his submissions, raises three issues:
a. The amount of insurance based on my reasons for judgment significantly exceeds the support obligation and was based on an error in the amount of coverage through the respondent’s death benefit. He argues that the amount of insurance required to secure monthly spousal support payments of $1,504 is $308,643.
b. The reasons do not include a provision that would permit the respondent to periodically reduce his life insurance as his spousal support obligations are reduced without the requirement of returning to court and demonstrating a material change in circumstances. The respondent submits that he should designate the applicant as the beneficiary of the Canada Life policy of $200,000 until the applicant attains age 73, at which point it will be reduced. Further, until the applicant turns 67 years of age, she will be designated as the beneficiary of $108,643 of the death benefit, then $51,819 for the ages of 67 to 73 and after age 73, the respondent is free to deal with his death benefit as he wishes.
c. The reasons for judgment also stipulated that the support obligations are to be a first charge on the respondent’s estate. The respondent submits that the order should be that the support obligation binds the respondent’s estate but not that it is a first charge. If the court did not want to order that the support obligation be a first charge, then this should only apply in the event that the insurance and death benefit provisions are not in place as required under the order at the time of the respondent’s death.
Applicant’s Position
[7] The applicant, in her submissions seeks various relief, including the following:
a. for the first time, she seeks to vary the spousal support effective January 1, 2016, to $2,008 per month; increasing the spousal support to $2,049 effective January 1, 2017, plus an increase in accordance with the annual percentage change in the Consumer Price Index for Canada in the preceding 12 months and increasing the spousal support to $2,065 effective January 1, 2018, plus an increase in accordance with the annual percentage change in the Consumer Price Index for Canada in the preceding 12 months;
b. changing the name of the life insurance company from Great West Life to Canada Life;
c. adding a paragraph that to the extent that the insurance proceeds payable to the applicant following the death of the respondent exceeds the insurance required as per a schedule attached to the order, the applicant shall hold the excess insurance proceeds in trust for the estate of the respondent and shall pay same to the estate of the respondent within 30 days of receipt; and
d. adding a paragraph that to the extent that the insurance proceeds payable to the applicant following the death of the respondent are less than the insurance required as per a schedule attached to the order, the applicant shall have a first charge against the estate of the respondent to the extent of the insurance deficiency.
Analysis
[8] Pursuant to Rule 25(19) of the Family Law Rules, the court, on motion, may change an order that:
a. was obtained by fraud;
b. contains a mistake;
c. needs to be changed to deal with a matter that was before the court but that it did not decide;
d. was made without notice; or
e. was made with notice, if the affected party was not present when the order as made because the notice was inadequate or the party was unable, for a reason satisfactory to the court, to be present.
[9] In Schmuck v. Reynolds-Schmuck (2000), 2000 22323 (ON SC), 46 O.R. (3d) 702, 94 A.C.W.S. (3d) 504, Justice Himel reviewed the jurisdiction of the court when a party requests clarification and a review of certain issues addressed in the reasons for judgment. At paragraph 16 the court stated:
At this point, a judgment has been rendered but it has not been formally entered. The case law is clear that until that time, a judge is not yet functus. The case law also recognizes that a trial judge has a wide discretion to permit the re-opening of the case prior to the entering of the judgment: See Castlerigg Investments Inc. v. Lam (1991) 1991 7355 (ON SC), 2 O.R. (3d) 216 (Ont. Gen. Div.). Therefore, it is open to me to exercise my discretion and re-open the case for a reconsideration of certain issues.
Named Life Insurer
[10] I agree that a mistake was made regarding paragraphs 236(d), 237 and 238(d) by incorrectly designating the life insurance company to be Great West Life. I order that these paragraphs be amended to identify the respondent’s life insurance company as Canada Life.
Indexation
[11] With respect to the indexation of the spousal support, at trial, the applicant requested that support be adjusted each year in accordance with the increase in the cost of living. The respondent made no submission, at trial, with respect to indexation as the issue was raised in submissions and my reasons for judgment did not address that issue, pursuant to rule 25(19)(c), I have jurisdiction to deal with this issue.
[12] Indexation was a claim for relief made by the applicant in her application. The Court has the discretion to order indexation under the Divorce Act in a manner consistent with the Family Law Act (Linton v. Linton (1990), 1990 2597 (ON CA), 1 O.R. (3d) 1, 24 A.C.W.S. (3d) 524 (Ont. C.A.)).
[13] Pursuant to subsection 34(5) of the Family Law Act, indexation may be ordered in accordance with the percentage change in the Consumer Price Index for Canada.
[14] One of the policy considerations behind indexation is that it insulates the support payee from the erosion of support by inflation and it avoids the need for future variation applications. (Linton at paras. 102-106).
[15] Where the entitlement to spousal support is based on non-compensatory and compensatory factors, it is appropriate that spousal support be indexed annually to the cost of living (Meiklejohn v. Meiklejohn (2001), 2001 21220 (ON CA), 150 O.A.C. 149, 19 R.F.L. (5th) 167 (Ont. C.A.)).
[16] In this case, both parties’ current incomes consist primarily of indexed pensions. I have found that the applicant is entitled to spousal support based on non-compensatory as well as compensatory factors. I see no reason why the spousal support should not be indexed.
[17] Consequently, I order the spousal support shall be increased annually, commencing January 1, 2017, and on the first day of January of each subsequent year by the percentage change in the Consumer Price Index for Canada for prices of all items since the same month of the previous year, as published by Statistics Canada.
Amount of Support
[18] With respect to the request by the applicant to vary the quantum of spousal support, I agree with submissions of the respondent that the applicant is seeking to reargue the quantum of spousal support based on new evidence including correspondence from Public Works dated May 2, 2017, and a report from Mr. Martel dated May 5, 2017.
[19] While I have jurisdiction to correct my reasons for judgment within the scope of rule 25(19) of the Family Law Rules, the applicant is seeking to argue for an increase in the spousal support. This is not a request for correction. It seeks to revise the substantive issue of quantum of support. There has been no request to re-open the trial proceedings. The applicant’s new submissions are different than the submissions made by the applicant’s previous counsel. It is fundamentally unfair to allow the applicant to reargue her case and rely on evidence that was not submitted to during the trial. Consequently, I will not consider the request to vary the quantum of spousal support.
Death Benefit
[20] With respect to the correction of the death benefit, it is agreed that paragraph 236(e) should be changed to read as follows:
The respondent’s death benefit is currently in the amount of $511,000, which is reduced by 10% each year starting on April 1, 2020.
Quantum of Life Insurance and Variation of Life Insurance
[21] With respect to the required amount of life insurance, at trial, the applicant’s submission was that the amount of life insurance would vary based on the amount of the spousal support ordered. During oral submissions, the applicant advocated for a life insurance amount of $365,000. In addition, the applicant submitted that the Court should set an amount of life insurance and then the respondent would choose which policy he would use to comply with the order.
[22] As a result of my decision, the applicant is the beneficiary of life insurance coverage in the amount of $711,000 and she now seeks to maintain the life insurance coverage of $711,000 with the proposition that she be the trustee of any excess amount of life insurance. The applicant’s current position was not advocated at trial. Further, the applicant has attempted to file new evidence upon which she makes new submissions to support her contention.
[23] The respondent’s submission at trial was that there should be no life insurance and if any life insurance were to be provided, it should only be the $200,000 policy and the cost of the premium should be factored into the support. The respondent’s current submission is that based on my finding that the amount of spousal support should be $1,504 per month, the amount of life insurance should be $308,643 with a decreasing balance over time. Again, as in the case of the applicant, this position was not advocated at trial and the respondent has filed new evidence to support his submissions.
[24] While I agree that I may correct an error in my reasons for judgment, I do not agree that the parties may re-litigate the issues based on new evidence that was not provided to me during the trial or during the submission stage.
[25] During oral submissions, the respondent argued that three factors should be taken into consideration in deciding the issue of life insurance: (1) the amount of the insurance required, (2) the amount should diminish over time and (3) the premiums should be factored into the support. The applicant did not address a reduction in the amount of the life insurance in her submissions.
[26] In my reasons for judgment, I determined the amount of insurance and factored the premiums into the calculation of the monthly spousal support. I did not address the issue of the life insurance being reduced over time. I relied on the Katz decision in arriving at my conclusion.
[27] I find that it is fair and reasonable that the amount of life insurance may diminish as the amount of support is reduced. I order that paragraph 237 of my reasons be replaced with the following:
I order the respondent to designate the applicant as the irrevocable beneficiary of his Canada Life policy and as the irrevocable beneficiary of $125,000 of his death benefit through his employment. I order that the respondent may apply, from time to time, to reduce the amount of life insurance required to secure his obligation to pay spousal support.
Obligation of Support Binding on Estate
[28] Neither party specifically addressed this claim for relief in their oral submissions. The respondent submits that it may have been an oversight in my reasons. The applicant disagrees and says there is no mistake.
[29] My decision was not an oversight and was specifically designed to make the obligation binding on the payor’s estate in accordance with the Katz decision.
Costs
[30] I am not inclined to award costs to either party because the success appears to be divided. However, if either party wishes to make costs submissions, the respondent may make such submissions by October 6, 2017, and the applicant by October 20, 2017.
Released: September 20, 2017
Shelston J.
CITATION: Kirvan v. Kirvan, 2017 ONSC 5560
COURT FILE NO.: FC-12-2817
DATE: 2017/09/20
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Mary Anne Kirvan
Applicant
– and –
Myles John Kirvan
Respondent
amended REASONS FOR JUDGMENT
Shelston J.
Released: September 20, 2017