CITATION: Kaine v. Kaine, 2017 ONSC 6636
COURT FILE NO.: 00-FL-2091-1
DATE: 2017/11/03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Charles Kaine
Applicant
– and –
Mary Kaine
Respondent
Gregory P. Farnand, for the Applicant
Paul Jakubiak, for the Respondent
HEARD: November 2, 2017 at Ottawa
DECISION ON MOTION
SWARTZ J.
Overview and Issues
[1] This is the Applicant’s motion to change the final order of Hackland, J. dated May 9, 2005. The Applicant, Mr. Kaine, is asking to terminate or reduce his spousal support payments (currently $1,793 per month) retroactive to September 1, 2016.
[2] He also asks to remove the Respondent, Ms. Kaine, from his life insurance policy, medical insurance and estate plans. Also requested is that the court finalize the Kaine’s divorce and that a cost order be made.
[3] The Respondent, Ms. Kaine, opposes the motion and says that spousal support should not be changed as the Applicant’s change in circumstance is not such that his ability to pay is compromised.
[4] She asks in the alternative that if a reduction is ordered that it be only a modest reduction as she has continuing need, the Applicant has the ability to pay and she has not recovered financially from the marriage and separation. She asks that I consider the inheritances and gifts that the Applicant has received as evidence that the Applicant can still pay the existing spousal support, despite his retirement.
[5] In submissions, counsel for the Applicant notes that his client is not now seeking a termination of spousal support, but rather only a reduction. He says his expenses have greatly increased because of his illness and that he can no longer pay the original support amount since his retirement and increased expenses.
Historical Summary
[6] These parties married in June of 1991 and separated in 2000. The period of their common law cohabitation is disputed between them at this time, but it is acknowledged that their total relationship was between 12 and 13 years in duration.
[7] Ms. Kaine is now 65 and Ms. Kaine is 68 this year. She was 51 at the time of the order.
[8] Mr. Kaine was diagnosed with Parkinson’s in 2008 and now uses a wheelchair. He was on sick leave for a period and retired in August 2016.
[9] He is owed a severance of approximately $52,000 which has not yet been paid. This severance will be reduced, when it is paid, as a result of overpayments made to him.
[10] At the time of the original order, Mr. Kaine’s income was $85,000 and Ms. Kaine’s was $0.
[11] It is undisputed that in 2016 Mr. Kaine’s line 150 income was approximately $110,000 and that part of that income resulted from an overpayment of salary that will be deducted from the severance payment he will receive in the future.
[12] It is also undisputed that the Applicant’s income for 2017 is projected to be between approximately $73,263 and $73,900 (which includes all of his pension income and does not include the severance payment that has yet to be paid:
The Law
[13] I note the relevant law regarding variations as follows:
Test Regarding Spousal Support Variation
Pursuant to Section 17(4.1.) of the Divorce Act, before the court varies an order dealing with spousal support it shall satisfy itself that a change in the condition means, needs and other circumstances has occurred since the making of the spousal support order or the last variation order made in respect of that order, and, in making the variation order, the court shall take that change into consideration.
Objectives of Spousal Support Order on Variation Application
In making an order under s. 17 of the Divorce Act the court is required to take into consideration the conditions means, needs and other circumstances of each spouse. The variation order should:
(a) recognize any economic advantages or disadvantages to the former spouses arising from the marriage or its breakdown;
(b) apportion between the former spouses any financial consequences arising from the care of the marriage;
(c) relieve any economic hardship of the former spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time.
Boston Exception to Double Dipping
[64] To avoid double recovery, the court should, where practicable, focus on that portion of the payor’s income and assets that have not been part of the equalization or division of matrimonial assets when the payee spouse’s continuing need for support is shown (Hutchinson v. Hutchinson (1998), 1998 14876 (ON SC), 38 R.F.L. (4th) 377 at para. 9). In this appeal, that would include the portion of the pension that was earned following the date of separation and not included in the equalization of net family property.
[65] Despite these general rules, double recovery cannot always be avoided. In certain circumstances, a pension which has previously been equalized can also be viewed as a maintenance asset. Double recovery may be permitted where the payor spouse has the ability to pay, where the payee spouse has made a reasonable effort to use the equalized assets in an income-producing way and, despite this, an economic hardship from the marriage or its breakdown persists. Double recovery may also be permitted in spousal support orders/agreements based mainly on need as opposed to compensation, which is not the case in this appeal.
Boston v. Boston 2001 SCC 43, [2001] S.C.J. No. 45, SCC 43
[14] I note further the Willcock case and the 2017 Ontario Court of Appeal case of Schulstad v. Schulstad as helpful and what provide insight as to the approach to be taken.
“The approach which a court should take is to determine first, whether the conditions for variation exist, and if they do exist what variation of the existing Order ought to be made in light of the change of circumstances. In deciding whether the conditions for variation exist, it is common ground that change must be a material change of circumstances.” (Willcock v. Willcock 1994 28 (SCC), [1994] 3 S.C.R. 670, page 688, as followed in Schulstad v. Schulstad, 2017 ONCA 95, page 4, para. 19)
[15] Beauchamp and Boudreau also summarize the considerations in a case like this one.
“The Court must look at all the circumstances involved in the case in order to determine whether in fact there has been a material change in circumstance.” (Beauchamp v. Beauchamp (Ont. Sup. Ct.) 2012 ONSC 344, page 5, para. 21)
“In determining the Respondent’s support obligation, the court must be mindful of his ability to pay, an assessment that must include the fact that his income will soon be significantly diminished.” (Boudreau v. Boudreau (Ont. Sup. Ct.) 2015 ONSC 7956, page 3, para. 13)
“It is clear that some economic hardship from the marriage or its breakdown persists with respect to the Applicant. She has never fully managed to overcome the reality that the marriage left her in a state of need for spousal support. I assign some of the responsibility for that to her, but not all of it. While she has been overly choosy in her employment resourcefulness and is unduly reluctant to use her capital for income purposes now, it is not as if she has made no effort to work or mismanages her assets in a wholly unreasonable way.” (Boudreau, page 4, para. 22)
“Ultimately, it is a judgment call. I must balance competing perspectives and interests, each legitimate in its own way.” (Boudreau, page 5, para. 23)
Analysis
[16] There is no evidence before me as to when the severance will be paid to Mr. Kaine. There is no clear evidence as to exactly how much it will be.
[17] Both Counsel acknowledge that this is due to the current difficulties in the “Phoenix” pay system for Federal employees. This is not Mr. Kaine’s fault.
[18] I find that it is therefore inappropriate and I am unable to address the question of including the severance in the Applicant’s income at this time as there is great uncertainty as to when it will be paid and in what amount.
[19] Similarly, I have no clear evidence of what the Respondent’s full entitlement to CPP and OAS may be. There is no evidence as to what the CPP credit division may be between these parties and how that will affect the two of them. It is reasonable to expect given their work histories that a CPP division of credits between them will increase Ms. Kaine’s entitlement and reduce Mr. Kaine’s entitlement. It is not entirely clear to me why the CPP credit division and OAS application have not been completed.
[20] I have reviewed and considered s. 17(4.1) of the Divorce Act and am satisfied that a change in the condition means, needs and other circumstances has occurred in this case, since the making of the order. In any event the original order of Hackland, J. contemplated a review once the Applicant retired and that has now occurred.
[21] Counsel for the Respondent mother does not contest the change but rather submits that is not significant enough to prevent the Applicant from paying the support order. I disagree.
[22] I have reviewed the objectives to be considered in a variation order under s. 17(7) of the Divorce Act and find on the facts before me that the Respondent continues to suffer financially from the marriage and its breakdown and that continued spousal support is necessary to address the financial consequences still flowing from the marriage and its breakdown. I agree with the Respondent that it is not now reasonable to expect her to be self-sufficient.
[23] The Applicant has conceded that a reduction rather than termination is appropriate at this time. Based on the evidence before me today I am prepared to make a reduction in the spousal support without prejudice to either party requesting a further review once there is better evidence on the severance, OAS and CPP issues.
[24] Counsel have provided Spousal Support Advisory Guidelines (SSAG) calculations that assist in clarifying their positions on behalf of the clients and provide some assistance to the court.
[25] Counsel for Mr. Kaine submits that his client should pay spousal support of $889 per month effective September 1, 2016, which is at the low end of the range suggested by the SSAG’s calculation and is based on a 12 year total cohabitation/marriage. His calculation also includes all of his client’s pension income.
[26] Counsel for the Respondent, Ms. Kaine, submits that spousal support should not be reduced as the Applicant’s financial circumstances do not warrant a reduction and while a change is acknowledged by the Respondent, it is not in his view to such a degree as to warrant any reduction in spousal support.
[27] In the alternative, if I find that a change is warranted, counsel for Ms. Kaine submits that spousal support should be set at the high end of the SSAG range, based on a 13 year total cohabitation/marriage. This amount he submits is $1,308, at the high end, and $1,144 at the mid-range. He asserts that the support should go no lower than mid-range.
[28] Both sets of SSAG calculations include both parties pension income from pensions that were equalized upon separation of the parties. Counsel agree that Ms. Kaine’s CSIS pension did not have increases post-equalization, but Mr. Kaine’s did.
[29] In the affidavit materials and in his factum, Counsel for the Applicant submits that only his client’s post-equalization income should be included for spousal support purposes and acknowledge also that only post-separation pension income of the Respondent should be utilized.
[30] In any event, in submissions both counsel have framed their client’s positions including all of the pension income of the Applicant and the Respondent and confirmed that while all of the Respondent’s pension income is to be included, there were in fact no post equalization increase; in Ms. Kaine’s CSIS pension and as a result the number is unaffected either way for her.
[31] Counsel for the parties were very practical in their submissions and I accept for the purposes of this motion, the manner in which they have fixed the Applicant’s income including his entire pension income. As I accept the quantification of his income I therefore make no finding as to whether a “Boston” reduction ought to be applied in this case.
[32] Counsel for the Applicant has submitted that spousal support at the low end of the SSAG the calculations which use all of his client’s pension income are appropriate. This was a clear concession on the part of the Applicant and I find that this position is reasonable and clearly addresses the evidence before me that the Respondent’s financial circumstances remain difficult and that as we see in Boudreau v. Boudreau, 2015 ONSC 7956:
[22] It is clear that some economic hardship from the marriage or its breakdown persists with respect to the Applicant. She has never fully managed to overcome the reality that the marriage left her in a state of need for spousal support. I assign some of the responsibility for that to her, but not all of it.
[23] Ultimately, it is a judgment call. I must balance competing perspectives and interests, each legitimate in its own way. An equitable assessment of the Respondent’s ability to pay, the Applicant’s efforts to both attain self-sufficiency through employment or through use of her assets in an income producing way, as well as the degree of economic hardship from the marriage breakdown that persists, leads me to the conclusion that the Respondent should continue to pay non-compensatory spousal support over and above what could be founded solely upon his post separation pension value as income. I also conclude, however, that such support should be reduced significantly given that his income has dropped as all understood that it would.
[33] There is a material change in this case that warrants a reduction in support and while I accept that the Respondent continues to have financial difficulty, I also note with concern that she has not yet attended to the CPP and OAS entitlements she may have.
[34] I have considered that Court of Appeal decision of Schulstad v. Schulstad, 2017 ONCA 95 which makes clear what must be addressed on the issue of “prematurity” as raised by the Respondent.
[21] The issue of prematurity is an issue at the first stage of the Willick analysis. In other words, prematurity is an issue impacting the threshold question of whether or not there has been a material change in circumstances. It is well-established that any decision to vary must not be made in accordance with events which may or may not occur: Messier v. Delage, 1983 31 (SCC), [1983] 2 S.C.R. 401, at p. 416. An application to vary will be premature if based on speculative or uncertain changes in circumstances: Dufresne v. Dufresne, 2009 ONCA 682.
[35] In my view, it is not premature to make a variation order. I am persuaded that it is necessary and appropriate to make a reduction in spousal support that reflects the actual situation in evidence between these parties today. Mr. Kaine has retired. His income is now reduced from the original $85,000 to an agreed level of approximately $73,500 (taking the mid-point of the relatively small difference in the parties’ SSAG quantifications of his income (without the severance included and with 100% of his pension).
[36] Ms. Kaine has continued need for and entitlement to spousal support. Mr. Kaine does not now have the same means that he did. His expenses are increasing in some areas. While it is undisputed that his 2016 income was $110,000 it is unclear when any overpayment of salary for that year will be addressed.
[37] I have considered the requests of the Respondent to consider the inheritance, gifts, absence of child support and sale of home as factors establishing the Applicant’s ability to pay the current amount of support. I note that the inheritance was received in or around 2008 and that the child has been independent for many years. I am not persuaded that these events are currently relevant to Mr. Kaine’s ability to pay.
[38] An order will be made to reduce spousal support based on the evidence before me. It is not premature to do so in light of my finding that it is inappropriate and unreasonable to attribute income to Mr. Kaine from the future uncertain severance pay he may receive. To attribute that as income to him would be premature. A change based on the evidence before me is not.
[39] There is clear evidence now that his income has dropped in 2017, he has retired, his expenses have changed and are increasing as a result of his declining health. I find that his annual income for 2017 is $73,900.00 from pension income, CPP, and OAS.
[40] I find that is not reasonable on the facts of this case to make a retroactive reduction and especially in light of the Respondent’s continuing financial limitations. She has however, been provided with lots of time to adjust her budget to the reduced financial circumstances and must now promptly attend to her OAS and CPP entitlements in order to improve her own situation as much as she can. It has been well over a year since the Applicant advised her of his retirement and despite his retirement in August 2016 the Applicant has continued to pay the full support. This is commendable. This was reasonable and necessary in the circumstances and has allowed a reasonable transition period for Ms. Kaine.
[41] Further, I find that to delay a reduction in support to wait for the OPP and OAS application to be completed by the Respondent would be unjust. There is convincing evidence now of a change that must be addressed. The Respondent has not yet completed her OAS application and questions remain as to her CPP division entitlement. She has provided little clear evidence in this regard. There is however uncontradicted information that these sources will increase her monthly income by $500-$900 (approximately). I note that this will leave Ms. Kaine with a similar gross annual income to what she has now ($34,000) once the adjusted support is included.
[42] As to the Applicant’s request to terminate the life insurance, the Applicant says that he refrained from processing the divorce until after his retirement in order to ensure that the Respondent would receive the survivor pension from his pension fund. This was uncontradicted by the Respondent. If that is accurate and can be confirmed in an amount that covers Mr. Kaine’s ongoing spousal support obligation to Ms. Kaine, this would be more than reasonable security for the spousal support, in my view. Provision of a current document from the pension administrator to confirm the details of any survivor pension is necessary. Upon the Respondent receiving such proof, it is reasonable for the Applicant to be free to leave his life insurance to whomever he chooses, as the Respondent’s spousal support will be protected properly.
Order
[43] Therefore Hackland J’s order of May 9, 2005, is varied and follows:
Spousal support payable by the Applicant Mr. Kaine to the Respondent Ms. Kaine shall be varied to $1,200 per month commencing November 1, 2017;
The Applicant shall provide to the Respondent a current letter from his pension administrator confirming that the Respondent is named as the irrevocable beneficiary of the survivor pension on the Applicant’s pension in an amount sufficient to secure the ongoing spousal support amount. Following provision of such documentary proof to the Respondent, the Respondent is to advise the Applicant in writing within 14 days of whether she is satisfied with the confirmation or not. Upon receipt of this confirmation the Applicant is free to remove the Respondent as beneficiary of his life insurance policies. Failing provision of the letter from his pension administrator, the Applicant is to maintain his life insurance policies in accordance with the order of Hackland, J. of May 9, 2005;
The matter of the divorce is left to the parties to address by way of procedural motion if necessary in order to finalize that claim.
The order of Hackland J. regarding medical benefits coverage for the Respondent shall continue and the Respondent’s entitlement shall continue as set out therein.
[44] This order is made without prejudice to the parties returning to the court on further and better evidence regarding the severance of the Applicant and the CPP/OAS receipt of the Respondent, if necessary. If there are difficulties addressing the life insurance provisions that too may be returned.
[45] I note that the proposal in submissions by the Applicant to pay a lump sum amount of spousal support to the Respondent out of his “after tax” receipt of the severance appears to be a possible future option for the parties to consider. Unfortunately, I am unable to address this possible solution in this motion as a result of the lack of evidence in this regard. I am similarly unable to make findings regarding what the future CPP and OAS entitlements of the Respondent may be as she has not taken the necessary steps to be in a position to put that evidence clearly before me despite being requested to do so by previous order of this court.
[46] Costs submissions have been received and are reserved.
Madam Justice Deborah Swartz
Released: November 3, 2017
CITATION: Kaine v. Kaine, 2017 ONSC 6636
COURT FILE NO.: 00-FL-2091-1
DATE: 2017/11/03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Charles Kaine
Applicant
– and –
Mary Kaine
Respondent
DECISION ON MOTION
SWARTZ J.
Released: November 3, 2017