OTTAWA COURT FILE NO.: 05-FL-3107
DATE: 20180305
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Jocelyne Bater, Applicant
AND:
Craig Bater, Respondent
BEFORE: Justice A. C. Trousdale
COUNSEL: Gary Blaney, Counsel for the Applicant
Jane Murray, Counsel for the Respondent
HEARD: November 16, 2017
ENDORSEMENT ON MOTION TO CHANGE
[1] The Respondent, Craig Bater seeks to terminate and/or reduce the spousal support payable by him to his former spouse, the Applicant, Jocelyne Bater pursuant to a consent court order dated May 20, 2008 based on a material change in circumstances of both parties. He had originally sought a termination or reduction of support as of August 29, 2014 but I was advised at the opening of the hearing that he is now seeking the termination or reduction effective January 1, 2017. The Respondent also seeks the termination of the requirement he keep a certain amount of life insurance coverage in effect for the Applicant. In the alternative, if it is determined that the support should not be terminated at this time, the Respondent seeks that it be reduced and that it be automatically terminated upon the Respondent attaining the age of 65 years.
[2] The motion is opposed by the Applicant who asks for an order that the Respondent’s motion to terminate or reduce spousal support be dismissed without prejudice to the Respondent’s right to seek a variation upon his turning 65 years of age. The Applicant also requests a retroactive adjustment of spousal support as the Respondent’s income had increased since the date of the original order.
[3] Each party had filed affidavit material. The parties had agreed that the transcripts of the prior questioning of each of the parties would be filed as evidence at the hearing. The parties had also consented that each party could be cross-examined at the hearing. The Respondent’s counsel cross-examined the Applicant at the hearing. The Applicant’s counsel did not wish to cross-examine the Respondent. I then heard oral argument from both counsel.
Background
[4] The Applicant was born in April, 1947 and is now 70 years old. The Respondent was born in October, 1955 and is now 62 years old. The parties commenced cohabitation in August, 1986. Prior to cohabitation, the parties entered into a Cohabitation Agreement dated July 31, 1986. The parties married on January 9, 1988. Prior to the marriage, the parties entered into a Marriage Contract dated December 10, 1987.
[5] The Respondent is a successful lawyer and carried on a private practice during the marriage. The Applicant worked at various jobs in retail during the marriage for approximately minimum wage. There were no children born of their marriage.
[6] The parties separated on March 20, 2004. Pursuant to a temporary order of Justice Hackland made on July 6, 2006, the Respondent was ordered to pay temporary spousal support to the Applicant in the sum of $5,000.00 per month.
[7] The parties entered into a Separation Agreement in March, 2008. Some of the terms of the Separation Agreement were incorporated into the consent order of Justice Forget made on May 20, 2008 (“the current order”) The parties were divorced on May 27, 2008.
[8] The current order provides that the Respondent shall pay to the Applicant spousal support in the sum of $5,500.00 per month commencing June 1, 2007.
[9] Relevant paragraphs of the current order to this Motion to Change are the following:
2.02 The said support shall be paid until the occurrence of one of the following events:
a) the death of the Wife;
b) the death of the Husband, provided paragraph 3 has been fully complied with;
c) the occurrence of a material change in circumstances.
2.03 The Wife acknowledges that she must make all reasonable efforts to contribute to her own support having regard to her ability to do so. She must make all reasonable efforts to maximize her earnings.
2.04 Both parties have an obligation to make reasonable and prudent efforts to maximize and preserve his/her investments and savings for his/her retirement.
3.01 As long as the Husband is obliged to support the Wife, he agrees to maintain in force life insurance to secure his support obligation.
3.02 Until the Wife reaches the age of 65, the Husband will maintain life insurance in the amount of at least $300,000.00 and thereafter the Husband will maintain life insurance in the amount of at least $200,000.00, to secure his support obligation.
3.03 The beneficiary of the insurance maintained by the Husband to secure spousal support will be Lee Mosley in trust for the Husband and Wife, as their interests may appear, or such other substitute trustee as the parties may agree upon from time to time (hereinafter “the trustee”).
3.04 The Husband agrees to pay the required premiums to maintain this insurance coverage and not to borrow or pledge under or against this policy or encumber it in any way without the prior written consent of the Wife.
3.05 The Husband agrees to annually provide the Wife with documentary evidence that he is in compliance with the provisions of this paragraph 3.
3.06 In the event that the Wife ascertains that the payment for such policy is in arrears and the Husband is unwilling or unable to make the necessary payment, the Wife shall be entitled to make whatever payments are necessary to maintain a policy in good standing and shall be entitled to be fully indemnified by the Husband for such payment.
3.07 If the Husband dies without the life insurance coverage described in this paragraph in effect, his obligations to support the Wife as set out in this Agreement, any amendment thereto or any court order shall be a first charge on his estate.
5.01 The spouses intend paragraphs 2, 3 and 4 of this Agreement to be final except for variation by reason of a material change in circumstances. A material change in circumstances need not be unforeseen by the parties or foreseeable for this paragraph to apply.
5.02 If a material change in circumstances occurs, only the provisions in paragraphs 2, 3 and 4 of this Agreement may be varied. Each party shall be under a positive obligation to immediately notify the other of a material change in his/her circumstances.
5.03 The parties acknowledge that
a) the retirement of the husband may constitute a material change in circumstances.
b) the remarriage of each party may constitute a material change in circumstances.
c) the Wife attaining the age of 65 may constitute a material change in circumstances.
5.04 In the event a party seeks to vary the provisions of this Agreement, the spouse wanting variation shall notify the other in writing of the variation sought and the spouses may then confer with each other personally or through their solicitors to settle the issue of variation.
[10] The Respondent remarried in 2009. He did not advise the Applicant of his remarriage. His current spouse who worked for the Federal Government for 30 years retired in 2012. She then did some consulting work. She fully retired in 2016 and is in receipt of pension income. She contributes approximately $53,000.00 to $54,000.00 per year towards the living expenses of the couple. The Respondent and his current spouse have one of her four children (age 24) residing with them. That son is temporarily off work as he has had some surgery and has diabetes.
[11] The Applicant commenced cohabitation with her current partner in August, 2014. They are not married. The Applicant did not advise the Respondent that she was cohabiting with her current partner. Her current partner is 59 years old. He retired at approximately age 52 when he took an early retirement package offered by his industrial employer. The Applicant did not know him when he retired. He has apparently not looked for any work since his retirement. He has some serious medical issues at this time. The Applicant and her partner share all of their household and transportation expenses and each of them pays his and her own personal expenses such as hairdresser, etc.
[12] The Respondent worked full time at his law practice until January, 2016 when he began working part-time (60%) with the intention to totally retire at the end of 2017 when he would be 62 years old. The Respondent formulated the intention in 2012 that he would retire at age 62 in 2017. At that point he advised his law firm partners of his intention and the firm bought out his capital interest in the firm over the following 5 years. This was pursuant to a Partnership Agreement dated December 11, 2015. The Respondent is no longer a partner at the firm as of January, 2017 and he plans on retiring from the firm at the end of 2017.
[13] The Respondent advised the Applicant of his intention to retire at the end of 2017 in either July, 2015 according to his evidence, or in the fall of 2015 according to the Applicant’s evidence. The Respondent commenced this Motion to Change on March 20, 2017.
[14] The Applicant was employed at the date of separation at a store. Her employment there ended in April, 2006. The Applicant states she has been unable to work since then for health reasons.
[15] The Respondent has continued to pay the monthly spousal support in the sum of $5,500.00 per month to the Applicant pursuant to the current order.
ISSUES
[16] The issues in this matter are as follows:
(1) Has either party had a material change in circumstances?
(2) If either party has had a material change in circumstances, should there be any change in the spousal support order made on May 20, 2008 by termination or reduction or increase of the spousal support order?
(3) If there should be any change of the spousal support order, at what date should such a change be effective?
(4) If there should be a change of the spousal support order does either party owe the other any reimbursement for underpayment or overpayment?
(5) If there has been a material change in circumstances, should the Respondent be obligated to continue to maintain any life insurance for the benefit of the Applicant?
(6) What if any costs should be payable by either party to the other with respect to this Motion to Change?
ANALYSIS
[17] As the current order was granted pursuant to the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), as am. (“the Act”), variation of the order is governed by Section 17 of the Act. Relevant portions of s.17 of the Act to this case are as follows:
17 (1) A court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively,
(a) a support order or any provision thereof on application by either or both former spouses; or
(b) a custody order or any provision thereof on application by either or both former spouses or by any other person.
17 (3) The court may include in a variation order any provision that under this Act could have been included in the order in respect of which the variation order is sought.
17 (4.1) Before the court makes a variation order in respect of a spousal support order, the court shall satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse 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.
17 (7) A variation order varying a spousal support 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 any child of the marriage over and above any obligation for the support of any child 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.
[18] In the case of L.M.P. v. L.S., 2011 SCC 64, [2011] 3 S.C.R. 775 at paragraphs 29 to 36, the Supreme Court of Canada sets out the proper approach to the variation of existing orders under s.17 of the Act as follows:
In determining whether the conditions for variation exist, the threshold that must be met before a court may vary a prior spousal support order is articulated in s. 17(4.1). A court must consider whether there has been a change in the conditions, means, needs or other circumstances of either former spouse since the making of the spousal support order.
In our view, the proper approach under s. 17 to the variation of existing orders is found in Willick v. Willick, 1994 28 (SCC), [1994] 3 S.C.R. 670, and G. (L.) v. B. (G.), 1995 65 (SCC), [1995] 3 S.C.R. 370. Like the order at issue in this case, Willick (dealing with child support) and G. (L.) (dealing with spousal support) involved court orders which had incorporated provisions of separation agreements. Both cases were decided under s. 17(4) of the Divorce Act, the predecessor provision to s. 17(4.1).
Willick described the proper analysis as requiring a court 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 in circumstances” (p. 688). In determining whether the conditions for variation exist, the court must be satisfied that there has been a change of circumstance since the making of the prior order or variation. The onus is on the party seeking a variation to establish such a change.
That “change of circumstances”, the majority of the Court concluded in Willick, had to be a “material” one, meaning a change that, “if known at the time, would likely have resulted in different terms” (p. 688). G. (L.) confirmed that this threshold also applied to spousal support variations.
The focus of the analysis is on the prior order and the circumstances in which it was made. Willick clarifies that a court ought not to consider the correctness of that order, nor is it to be departed from lightly (p. 687). The test is whether any given change “would likely have resulted in different terms” to the order. It is presumed that the judge who granted the initial order knew and applied the law, and that, accordingly, the prior support order met the objectives set out in s. 15.2(6). In this way, the Willick approach to variation applications requires appropriate deference to the terms of the prior order, whether or not that order incorporates an agreement.
The decisions in Willick and G. (L.) also make it clear that what amounts to a material change will depend on the actual circumstances of the parties at the time of the order.
In general, a material change must have some degree of continuity, and not merely be a temporary set of circumstances (see Marinangeli v. Marinangeli (2003), 2003 27673 (ON CA), 66 O.R. (3d) 40, at para. 49). Certain other factors can assist a court in determining whether a particular change is material. The subsequent conduct of the parties, for example, may provide indications as to whether they considered a particular change to be material (see MacPherson J.A., dissenting in part, in P. (S.) v. P. (R.), 2011 ONCA 336, 332 D.L.R. (4th) 385, at paras. 54 and 63).
The threshold variation question is the same whether or not a spousal support order incorporates an agreement: Has a material change of circumstances occurred since the making of the order? (See Willick; G. (L.); Leskun v. Leskun, 2006 SCC 25, [2006] 1 S.C.R. 920.)
Has there been a material change in circumstances since the May 20, 2008 order?
The Respondent’s Financial Situation
[19] In the recitals of the Separation Agreement entered into between the parties, the parties agreed that the Respondent’s 2006 annual income was approximately $273,000.00 which consisted of income on his tax return of $137,700.00 plus an increase in the retained earnings of his professional company in the sum of $102,091.00.
[20] As per the same recitals, in 2007 the Respondent was paid $257,000.00 and he estimated that the retained earnings of his professional corporation would increase by $108,000.00. This would total $365,000.00 for 2007. The recitals go on to state that the Respondent’s law firm has agreed in principal to amend the profit sharing arrangement which will result in a reduction of the Respondent’s share of the firm’s profit and his income will likely return to previous levels in future years. The recitals stated that the Respondent expects his income in 2008 will be $250,000.00 to $275,000.00.
[21] The Respondent married his current spouse in 2009. She worked for the Federal Government until her retirement in 2012 and then worked for a consulting firm until November, 2016 when she totally retired. Her current income is pension income. The Respondent’s Line 150 income and his current spouse’s income from 2009 to 2016 are as follows:
Respondent Respondent’s Current Spouse
2009 $294,367 2009 $ 90,000
2010 $363,840 2010 $ 78,693
2011 $252,436 2011 $ 81,072
2012 $362,679 2012 $140,542
2013 $341,385 2013 $ 64,714
2014 $312,228 2014 $ 55,253
2015 $345,911 2015 $ 53,253
2016 $309,192 2016 $ 53,939
[22] The Respondent argues that his actual earned income was less than that shown in the figures from 2012 to 2016 as his income in those years included a substantial portion of return on his capital investment in the law firm of between $80,000 and $180,000 per year. It is the Respondent’s position that because in the Cohabitation Agreement, the Marriage Contract, and the Separation Agreement, the Applicant has totally released any claim against the Respondent’s law firm or his professional corporation through which he practises, those figures should not be included in his income for spousal support purposes.
[23] In addition to the Respondent’s aforesaid income, the retained earnings in the Respondent’s professional corporation, of which he is the sole shareholder, increased by $222,764 from 2010 to 2016.
[24] The Respondent’s Financial Statement reveals that he has assets including a home, a recreational property, RRSPs, savings and retained earnings worth $1,542,000 and debts of $100,000.00 for a net worth of $1,442,000.00. This does not take into account any tax that will ultimately be payable on RRSPs and retained earnings in his professional corporation (estimated by the Respondent to be $228,160.00) which the Respondent states would reduce his net worth to $1,214,665.00. The Respondent’s net worth has increased substantially since the separation.
The Applicant’s Financial Situation
[25] The Applicant has not worked outside the home since April, 2006. Her evidence is that she had a nervous breakdown at that time and had other medical issues.
[26] The Separation Agreement between the parties in March, 2008 states in the recitals that the Applicant’s income in 2006 was $79,431.86 made up of $60,000.00 in spousal support and $19,431.86 in employment income earned between January, 2006 and August 2006. The recitals went on to state that “The Wife stopped working in August 2006 and is not currently earning any income other than Canada Pension Plan payments. The wife has recently experienced medical problems which may affect her ability to return to work in the future.”
[27] The Applicant never did return to employment and her evidence is that she has a number of medical issues which prevented her and continue to prevent her from going back to work, as well as she has developed further medical problems which prevent her from working.
[28] The Applicant began receiving her Canada Pension Plan payments (CPP) when she turned age 60.
[29] According to the Applicant’s Financial Statement sworn April 20, 2017, her current income sources not including spousal support are CPP of $5,180.00 and Old Age Security (OAS) of $6,876.00 for a total of $12,048.00 per year. With the spousal support of $66,000.00, her current gross income is $78,048.00. The Applicant and her current partner own a condominium in Florida and have rented it out for short periods of time in the past but the Applicant’s evidence is that the expenses of the condominium exceed the rental income.
[30] The Applicant began cohabiting with her current partner in August, 2014. They are not married. The Applicant’s partner is not divorced from his first wife.
[31] The Applicant’s Line 150 income from 2009 to 2016 not including spousal support and including spousal support, and her current partner’s Line 150 income from 2014 to 2016 are as follows:
Applicant Applicant’s Partner
Year without spousal with spousal Line 150
2009 $ 5,169 $71,169
2010 $ 4,813 $70,813
2011 $ 4,792 $70,791
2012 $ 9,245 $75,245
2013 $11,562 $77,562
2014 $11,704 $77,704 $46,144
2015 $12,074 $78,074 $47,489
2016 $12,058 $78,058 $47,568
[32] The Applicant owns 50% of a home with her current partner which she states was appraised for $450,000.00, with her interest being worth $225,000.00 prior to encumbrances. She also owns 50% of a Florida condominium with her current partner. In her Financial Statement she stated her interest in that condominium was worth $49,000.00. The Applicant also has RRSPs and a TFSA with a total value of $296,891.00 and $20,000.00 in a bank account. The Applicant states that she has assets worth $593,964.00
[33] The Applicant and her current partner have purchased a one bedroom/ one bathroom 967 square foot condo to be built in Cobourg for $404,900.00 with a completion date of April 30, 2019. They took a line of credit against their current home to pay for the down payment and will sell their current home likely some time in 2018. They will also likely sell the Florida condominium in 2019. The Florida condominium will not be rented out any longer.
[34] The Applicant’s liabilities are $64,477.00 being 50% of the mortgage on their current home, her line of credit of $51,896.00 and notional tax on her RRSPs of $51, 988.00 for a total of $168,361.00.
[35] The Applicant states that her net worth is $425,603.00.
[36] In their Separation Agreement made in March, 2008 most of which terms were incorporated into the current order, the parties have provided that the spousal support is to be paid by the Respondent until the occurrence of either the death of the Applicant, the death of the Respondent provided he complies with the insurance provisions agreed upon, or the occurrence of a material change of circumstances. As both parties are still alive, in accordance with this paragraph the spousal support of $5,500.00 per month is to be paid until the occurrence of a material change in circumstances.
[37] Paragraph 5.01 of the current order and the same paragraph of the Separation Agreement provide guidance that a material change in circumstances need not be unforeseen by the parties or foreseeable. Paragraph 5.02 of each of those documents provides that each party shall be under a positive obligation to immediately notify the other of a material change in his or her circumstances.
[38] In paragraph 5.03 of the Separation Agreement and the current order, the parties have acknowledged that the retirement of the Respondent may constitute a material change in circumstances, the remarriage of either party may constitute a material change in circumstances, or the Applicant attaining the age of 65 years may constitute a material change in circumstances. All of those acknowledgements are permissive. Any of those occurrences may constitute a material change in circumstances but the order does not say that any of those occurrences shall constitute a material change in circumstances.
[39] There is also nothing in the Separation Agreement or current court order that provides that there may not be other circumstances that could constitute a material change in circumstances.
[40] I will now examine the occurrences which the parties agreed in their Separation Agreement and consent order may constitute a material change in circumstances.
The retirement of the Respondent
[41] Pursuant to the current order and the Separation Agreement, the retirement of the Respondent may constitute a material change in circumstances. There is nothing in the Separation Agreement or current order that states that the retirement must be voluntary or involuntary nor at what age the Respondent can retire.
[42] The Respondent decided in 2012 that he would retire from the practice of law at the end of 2017 after 5 more years of practice. The Respondent then began to receive payments from the law firm on account of his equity or capital in the firm. Pursuant to a retirement agreement entered into between the Respondent and his law firm in December, 2015, the Respondent received one half of his remaining equity in the firm on January 1, 2016 and one half of his remaining equity in the firm on January 1, 2017. That retirement agreement also provides for the Respondent to reduce his workload in 2016 and 2017 to about 60% of a full-time load and for him to retire fully from the practice on December 31, 2017.
[43] The Respondent did not advise the Applicant of his plan to retire until July, 2015 as alleged by the Respondent, or November, 2015 as alleged by the Applicant.
[44] During 2017, the Respondent was not an equity partner in the firm and his only revenues from the firm are from his own work, his personal billings, and a 10% share of associate lawyers’ billings on files on which the Respondent is the introducing and responsible lawyer. The 10% share of associate lawyers’ billings is only calculated at the end of the year so I do not have that figure.
[45] The Respondent expects that his professional corporation’s revenues from the practice of law in 2017 will be about $175,000. However, on reviewing the agreement the Respondent has with the firm for the 2017 year and his gross billings as at November 7, 2017, it appears that the amount to be received by his professional corporation plus his board work would be closer to at least $220,000.00 by November 7, 2017, if not more by the end of 2017. I also note that the Respondent was able to earn this income while only working 60% of the time in 2016 and 2017 according to the agreement with his firm. The Respondent states he has reduced the salary and dividends he is withdrawing from his personal corporation to $150,000 in 2017. However, the Respondent is the sole shareholder and he has control over how much or how little he withdraws and how much of his income is kept in the company as retained earnings. The Respondent was not willing to disclose to the Applicant the current state of his professional corporation’s retained earnings since December, 2016.
[46] The Respondent earns income from his position on a Board of Directors of another organization. This income was $23,000.00 in 2016. In 2017, he earned an additional amount of $13,000 over and above the regular salary for acting as Chair of the Board for a short term engagement. In 2018, the Respondent expects to earn about $30,000 to $32,000 for this engagement. He states that this employment is expected to end in April, 2019.
[47] In or about October, 2017, the Respondent had some discussions with his former partners about doing some counsel work for the law firm after December 31, 2017. There was interest but no firm agreements in that regard had been reached by the time this Motion to Change was heard in November, 2017.
[48] The evidence of the Respondent on questioning is that his partners were not insisting that he retire, nor was he losing any clients such that he felt he should retire. The Respondent’s evidence is that it was a planned retirement and that it was his choice to retire. He refers to certain health issues he has such as sleep apnea, skin issues, and difficulty sleeping due to work-related stress, but acknowledges that he has no medical reports of any kind that say that he has any medical impairment which would prevent him from working. However, the Respondent went on to say that he wishes to retire as he believes his health would continue to deteriorate if he were to continue his practice. He has found that some of his medical issues have improved somewhat since he has been no longer involved in the management and administration of the firm.
[49] I have been referred to and reviewed a number of cases where the payor spouse has retired and seeks to reduce or terminate spousal support. Those cases include: Hickey v. Princ, 2015 ONSC 5596, 2015 CarswellOnt 15670, Cossette v. Cossette, 2015 ONSC 2678, 2015 CarswellOnt 5928, Nye v. Nye, 2016 ONSC 1853, 2016 CarswellOnt 4894, Roy v. Roy, 2015 ONSC 45, 2015 CarswellOnt 101, Hesketh v. Brooker, 2013 ONSC 1122, 2013 CarswellOnt 1866, Bullock v. Bullock, 2004 CarswellOnt 919, Innes v. Innes, 2013 ONSC 2254, 2013 CarswellOnt 4983, and Schulstad v. Schulstad, 2017 ONCA 95.
[50] I find that there is no hard and fast rule to be applied in every case about when or at what particular age a support payor is entitled to retire and seek a reduction or termination of spousal support. An examination of the facts of each particular case is required and this examination may result in a different conclusion in different cases depending on the specific facts of each case.
[51] The Respondent argues that most of the cases involving retirement put forward by the Applicant deal with cases in which the spousal support is compensatory support rather than needs-based support.
[52] The Respondent also distinguishes a number of those cases on the basis that the payor spouse retired at a time when the number of years that the spouse had paid spousal support were less than half of the years of the marriage or cohabitation.
[53] In that regard, the Respondent asks the court to find that he has paid spousal support for 13 years in comparison to a marriage of 16 years.
[54] The parties cohabited from a period of almost 1 ½ years from August, 1986 to their marriage on January 9, 1988. They separated on March 20, 2004 after a marriage of just over 16 years. Accordingly the total period of cohabitation was just under 18 years.
[55] The Respondent argues that as the parties had a Cohabitation Agreement during their period of cohabitation which provided that they would not be responsible for the support of the other, the period of cohabitation should not be counted in the total years of cohabitation for the purpose of the Spousal Support Advisory Guidelines. The Respondent submits that there is nothing in the subsequent Marriage Contract of the parties that says that the Marriage Contract supersedes the Cohabitation Agreement. His position is that the period of just over 16 years is the relevant period of cohabitation for the purpose of the SSAGs.
[56] The Applicant claims that for the purpose of the SSAGs, the total period of cohabitation of just under 18 years should be taken into account.
[57] As this is a case where the Rule of 65 in the SSAGs applies as the age of the Applicant (almost age 57) at the date of separation plus the period of cohabitation of either 16 or 18 years is greater than 65, the duration would likely be indefinite (meaning “duration not specified” as per Spousal Support Advisory Guidelines: Revised User’s Guide, April 2016) as opposed to a set amount of time. Accordingly, I am not convinced that it would make much, if any, difference in this case.
[58] I find that there is evidence that the Respondent paid spousal support from at least January 2006 as the Applicant’s income tax return shows spousal support of $60,000.00 for that year. The temporary order of Justice Hackland of $5,000.00 per month was made May 1, 2006 so the $5,000.00 per month must have been paid for all of 2006.
[59] The evidence of payment prior to that time is not so clear. The Respondent claims that he paid spousal support prior to 2006, but there is no evidence of the amount. The Applicant acknowledges that the Respondent gave her $500.00 here and there and assisted her in buying a condominium by borrowing money on the matrimonial home for the down payment after separation, but there is no evidence of the amount borrowed or whether it needed to be repaid.
[60] On the evidence, I find that as at December 31, 2017 the Respondent has paid spousal support for a period of 12 years in comparison to a marriage of 16 years and a period of cohabitation of close to 18 years.
[61] The Respondent’s position is that he chose to retire at age 62 because of medical problems. He has not provided any medical evidence that he is unable to work due to medical problems. On the evidence before me I am not satisfied that any medical issues prevented the Respondent from continuing his employment. The Respondent’s retirement at age 62 was planned by him. I find that the Respondent voluntarily chose to retire from the practice of law at December 31, 2017. I find that there was nothing preventing the Respondent from continuing the practice of law at his prior firm or elsewhere after December 31, 2017.
[62] In addition, I find that there is no certainty that the Respondent will retire from all employment as a lawyer at December 31, 2017. It appears possible that he may do counsel work for his prior firm. The Respondent also continues to have a paid position as a director on a board of directors and perhaps other board work is available to him. The Respondent may decide to use his legal skills in other areas of the law or business.
[63] That raises the issue of whether this motion has been brought prematurely in that it was commenced 9 months before the Respondent said he planned to retire. However, there is no certainty as to whether the Respondent will cease to use his legal skills and expertise to earn income in the future, nor as to what that income may be. The Respondent seeks reduction or termination of the spousal support based on speculation as to what his income will be in the future.
[64] On the evidence before me, I find that the Respondent’s voluntary decision to work at 60% of the time in 2016 and 2017 and his voluntary decision to retire at age 62 are not material changes in circumstances.
The Applicant attaining the age of 65 years
[65] The Applicant attained the age of 65 years on April 16, 2012. Should that constitute a material change in circumstances?
[66] The Separation Agreement made in March, 2008 reflected that the Applicant stopped working in August 2006 and was not currently earning any income other than Canada Pension Plan payments. Accordingly, the Applicant was already in receipt of Canada Pension Plan payments at the time the current order was made.
[67] When the Applicant turned 65 on April 16, 2012, the change in her income was the receipt of OAS which on the evidence before me appears to be less than $7,000.00 per year. I do not find that an increase of $7,000.00 in the Applicant’s income would constitute a material change in the Applicant’s circumstances.
The remarriage of the Applicant or the Respondent
[68] The Respondent remarried in 2009. He did not advise the Applicant of his remarriage. It could be argued the Respondent had a positive obligation to immediately notify the Applicant pursuant to paragraph 5.02 of the order if it was a material change in his circumstances.
[69] On the evidence before me, I find that the remarriage of the Respondent is a positive financial occurrence for the Respondent as he and his new spouse jointly have had greater income coming into the home and have been able to share living expenses. When the Respondent’s spouse retired from her government job, the Respondent acquired an interest of a survivor’s pension in his new spouse’s pension. The Respondent’s new spouse contributes her pension income towards their joint expenses. I note that the pension income of the Respondent’s new spouse is a little greater than the pension income of the Applicant’s current partner so the net benefit to each of the Applicant and the Respondent of re-partnering / remarriage is somewhat similar.
[70] The Respondent claims that he and his new spouse are supporting his new spouse’s 24 year old son as previously mentioned. However, the evidence is that the son earned $32,000.00 in 2016 from employment. Further, no evidence was provided with respect to that son’s income for 2017 or whether his medical expenses are covered by his insurance plan at his employment. Accordingly, I find that the 24 year old son living with the Respondent and his new spouse does not constitute a legal liability, and is not a material change in circumstances for the Respondent.
[71] On the evidence before me I do not find that the remarriage of the Respondent constitutes a material change in circumstances to justify a reduction or termination of the spousal support provisions in the current order.
[72] The Applicant has not remarried. However, she has re-partnered and has been cohabiting with her partner since August, 2014. They are sharing many of their living expenses.
[73] I was referred to the case of Boland v. Boland, 2012 ONCJ 102 on the impact, if any, of re-partnering. Murray J. stated at paragraphs 106 to 107:
[106] A former spouse who is in receipt of spousal support is not automatically disentitled from receipt of support because she or he repartners. Repartnering is simply a factor to be taken into account in the assessment of entitlement to and quantum of support.
[107] The caselaw indicates that the significance of the repartnering will vary, depending on a number of factors, such as:
• the duration and stability of the new relationship;
• the value to the support recipient of any benefits she or he receives by reason of this new relationship;
• the existence of any legal obligation of the new partner to provide support;
• the economic circumstances of support recipient’s new partner, sometimes in comparison to his or her former partner.
[74] The Applicant and her current partner have just passed the threshold in August, 2017 where there might be a spousal support obligation if they separated. However, the Applicant pointed out with SSAG calculations that if the Applicant’s only income were her CPP and OAS totalling $12,048.00 per year, the amount of support payable by the Applicant’s new partner on his income after three years cohabitation would only be in the range of $144.00 to $192.00 per month. Even at the highest level of support this would only give the Applicant a total annual gross income of $14,352.00.
[75] Unlike the Respondent, the Applicant has no survivor’s pension from her partner’s pension as he retired from his employment before he knew the Applicant. The Applicant’s partner has recently dealt with cancer and has had surgery and treatment. The Applicant’s evidence is that she and her partner intend to own the condominium in Cobourg as tenants in common. Their current home is apparently held as joint tenants although the Applicant maintains that is in error. The evidence is that the Florida condominium is held as tenants in common.
[76] I find that the Applicant’s assets are understated as her evidence is that she and her partner were able to obtain a line of credit on their current home for $450,000.00 which is what the Applicant states is the value of the home. Banks do not generally give a loan equal to the full value of the home. Accordingly, I find that it is very likely that the Applicant and her partner’s current home has a value of more than $450,000.00.
[77] I also find that the Applicant’s 50% interest in the Florida condominium is undervalued at $49,000.00 in her Financial Statement. The condominium was bought by the Applicant and her sister in 2014 for $85,000.00 (U.S.), with each paying for half of it. In 2016 her new partner bought out her sister’s share for $43,000.00 (U.S.). On questioning the Applicant stated that the last unit sold for $98,000.00 but she did not say when that was. She did say that if a similar unit to hers would be put up for sale today, the owners would be asking about $149,000.00 to $160,000.00 (U.S.) Accordingly, the Applicant’s half interest would likely be worth somewhere between $74,500.00 to $80,000.00 (U.S.) Further, at the time of purchase of the condominium the U.S. dollar was at or about on par with the Canadian dollar. That is no longer the case and likely the value would be 20 to 25% higher due to the currency difference at this time. I find that the value of the Applicant’s interest in the condominium is likely closer to $100,000.00 Canadian.
[78] Nevertheless, even after taking into account the Applicant’s underestimation of the value of her real estate, the Respondent has a significantly greater net worth than the Applicant.
[79] It was recognized in the Separation Agreement that the Applicant had medical problems which might affect her ability to work in the future. She has set out a long list of medical problems which she has at this time. There is no medical evidence regarding those problems. However, on questioning the Respondent advised that he does not take the position that the Applicant should be expected to work at this time. Given the Applicant’s age and the prior existence of medical problems already averted to in the Separation Agreement in 2008, I would not expect the Applicant to find employment at this stage of her life.
[80] I find that in the circumstances of this case, the re-partnering of the Applicant is not at this time a material change in the Applicant’s circumstances.
[81] The Respondent’s position is that the spousal support was needs-based support and was not compensatory support. He argues that the court should look at the cumulative effect of the Applicant’s age, her re-partnering, and the Respondent’s retirement. He also submits that it is time for the Applicant to start encroaching on her own assets for her support. He points out that the Applicant will be 71 years old in April, 2018 and will be shortly required to start accessing her RRSP funds when they are rolled over this year into a RRIF or an annuity. He argues that as a result of all of these aforesaid changes, the Applicant no longer has need for spousal support.
[82] The Applicant’s counsel acknowledges that there is no strong compensatory aspect to the spousal support. I would agree. I find on the facts before me that the spousal support was needs-based support. I note that in Justice Hackland’s decision on the motion for temporary support brought by the Applicant in 2006 (see Bater v. Bater, 2006 CarswellOnt 4107) where he ordered temporary spousal support of $5,000.00 per month, he stated:
This was a long marriage and there will continue to be a very significant disparity in income and resultant reduction in the standard of living of the wife as a result of the termination of the relationship.
Conclusion on material change in circumstance
[83] If the spousal support for the Applicant were terminated at January 2017 as requested by the Respondent, the household income of the Applicant for 2017 would be approximately $57,048.00 whereas the Respondent’s household income for 2017 is likely more in the range of at least $273,939.00 if not more.
[84] There is a substantial disparity between the Applicant’s current financial budget and the Respondent’s current financial budget. The Respondent’s monthly budget is considerably higher than the Applicant’s. If the spousal support were terminated I find there would be a substantial disparity between the standard of living in the households of the Applicant and the Respondent.
[85] I reject the Respondent’s argument that the Applicant no longer has need and that the spousal support should be terminated or at least reduced. In the case of Gray v. Gray, 2014 ONCA 659, Lauwers, J. for the court stated:
[26] I would agree with the motion judge that Ms. Gray is entitled to spousal support on a needs basis. But the motion judge’s determination of her actual need was wrong in fact and in principle.
[27] One of the objectives of the Divorce Act is to relieve economic hardship. Need is not measured solely to ensure a subsistence existence, but rather should be assessed through the lens of viewing marriage as an economic partnership. As stated by this court in Marinangeli v. Marinangeli (2003), 2003 27673 (ON CA), 66 O.R. (3d) 40 at para. 74, in determining need, courts ought to be guided in part by the principle that the spouse receiving support is entitled to maintain the standard of living to which she was accustomed at the time cohabitation ceased. The analysis must consider the recipient’s ability to support herself, in light of her income and reasonable expenses.
[86] I find on the evidence that the Applicant continues to have need for spousal support and continues to have economic hardship arising from the breakdown of the marriage. The Respondent has not satisfied the onus on him to prove a material change in circumstances. I find that there is no material change in circumstances at this time.
[87] I find that the Respondent’s motion to terminate or reduce the spousal support should be dismissed without prejudice to the Respondent requesting a review in the event of a material change in circumstances in the future.
[88] I have declined to make an order that the Respondent’s obligation to pay spousal support to the Applicant shall terminate automatically at age 65 as I do not know what the circumstances of each party will be at that time. However, the Respondent will not likely be required to work forever and “indefinite support” does not necessarily mean “permanent support”. (See page 29 of Spousal Support Advisory Guidelines: The Revised User’s Guide, April, 2016.) The Applicant will shortly have to take steps to either purchase an annuity or roll over her RRSPs to a RRIF and begin to draw down her resources. The financial impact of that is unknown at this time. The Applicant will need to start organizing her affairs to prepare for a time when the spousal support may be reduced or terminated.
Should there be a retroactive increase in spousal support?
[89] The Applicant claims that there should be a retroactive increase of spousal support based on the Respondent’s increase of income since the current order was made and the Respondent’s failure to advise the Applicant of those increases in income.
[90] The Applicant relies on paragraph 5.02 of the current order and the Separation Agreement which state:
If a material change in circumstances occurs, only the provisions in paragraphs 2, 3 and 4 of this Agreement may be varied. Each party shall be under a positive obligation to immediately notify the other of a material change in his/her circumstances.
[91] The Applicant alleges that the Respondent has breached this provision of the order.
[92] Neither the current order nor the Separation Agreement specifically state that either party is required to provide a copy of his and her income tax returns to the other. The evidence is that neither party ever asked the other for any income tax information until the Respondent told the Applicant in 2015 of his intention to retire at the end of 2017. There is no indexing clause in the current order or Separation Agreement. The evidence is that neither party notified the other of any changes in his or her circumstances, financially or otherwise.
[93] There is no evidence that the Applicant gave an effective notice to the Respondent of her claim for retroactive spousal support until April 2017 when she filed her responding Affidavit to the Respondent’s Motion to Change.
[94] The Respondent’s evidence is that some of his income from 2012 to 2017 was a return of capital as he sold his 50% interest in the firm and was paid out over 5 years. The Respondent’s evidence was that those amounts varied from between $80,000.00 to $180,000.00 per during those years. The Respondent’s position is that those capital amounts should not be included in his income for spousal support purposes. He particularly argues this because the Applicant had in the Cohabitation Agreement, the Marriage Contract, and the Separation Agreement released any interest in his law firm and in his professional corporation.
[95] The Respondent also argues that the Applicant should not share in post-separation increases where the support is non-compensatory support.
[96] In the case of Thompson v. Thompson, 2013 ONSC 5500, Chappel, J. reviewed the general principles which should guide and inform the Court’s exercise of discretion on the treatment of post-separation increases in a payor’s income in spousal support claims. At paragraph 103(b) she stated:
The right to share in post-separation income increases does not typically arise in cases involving non-compensatory claims, since the primary focus of such claims is the standard of living enjoyed during the relationship.
[97] I have previously found that the spousal support was needs-based support rather than compensatory support. The evidence is that the Applicant has been able to lead a relatively comfortable life with the spousal support of $66,000.00 per year which she has received from the Respondent since 2008 in addition to OAS and CPP. She has been able to purchase a condominium in Florida, and a home in Newcastle, and to vacation at a cost of $200.00 per month according to her Financial Statement.
[98] Taking into account all of the facts and circumstances of this case, I find that the request for a retroactive increase in spousal support should be dismissed.
Insurance
[99] The current order provides that to secure spousal support the Respondent is to maintain life insurance in the amount of at least $300,000.00 until the Applicant reaches the age of 65. Thereafter, the Respondent is to maintain life insurance in the amount of $200,000.00. A Trustee is named as beneficiary in trust for the Applicant and the Respondent. The Trustee is to invest the funds and pay to the Applicant whatever monthly amount of spousal support is required to be paid at that time until the Applicant is no longer entitled to spousal support or the Applicant dies. The remaining balance of the trust monies are then to be paid in accordance with the latest written direction from the Respondent or in the absence of any written direction, to the estate of the Respondent.
[100] The Respondent is now maintaining $200,000.00 life insurance in accordance with the current order. The current cost of that life insurance is $905.91 per year. The cost increases every five years. I find the cost is relatively reasonable at this time.
[101] The Respondent’s life insurance will not go directly to the Applicant in the event of his death. She will only continue to receive the monthly spousal support until her death or until she is no longer entitled to spousal support. The balance of the life insurance can then ultimately go to beneficiaries of the Respondent’s choosing.
[102] As I have determined that there has been no material change in circumstances and the spousal support should continue in accordance with the current order, the Respondent’s request to terminate the requirement that he maintain the life insurance is dismissed.
Costs
[103] If the parties are unable to agree on the issue of costs, either party may serve and file brief written submissions on costs plus a Bill of Costs and a copy of any offers to settle by April 4, 2018. If either or both party files written submissions as to costs, the other party shall have 10 days after being served with the submissions to serve and file brief reply submissions. If no submissions as to costs are served and filed by April 4, 2018, there shall be no order as to costs.
Justice A. C. Trousdale
Released: March 5, 2018
OTTAWA COURT FILE NO.: 05-FL-3107
DATE: 20180305
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jocelyne Bater
Applicant
- and -
Craig Bater
Respondent
BEFORE: Madam Justice A. C. Trousdale
COUNSEL: Gary Blaney, Counsel for the Applicant
Jane Murray, Counsel for the Respondent
ENDORSEMENT ON MOTION to change
Madam Justice A. C. Trousdale
Released: March 5, 2018