Court File and Parties
Court File No.: FS-14-5379 Date: 2018-09-13
Ontario Superior Court of Justice
Between:
Valerie Lynn Kotz, Applicant B. White, for the Applicant
And:
Mervin Daniel Kotz, Respondent M. Van Walleghem, for the Respondent
Heard: January 9 and April 4, 2017; June 7 and September 6, 2018; and by way of written submissions, at Kenora, Ontario
Before: Mr. Justice D.C. Shaw
Judgment
1The issue for trial is the quantum of spousal support to be paid by the respondent, Mervin Daniel Kotz, to the applicant, Valerie Lynn Kotz. All other issues between the parties had previously been resolved.
Background
2The parties began living together in June 1986. They were married on June 20, 1987. They separated in February 2013.
3The parties have two children who are adults and independent.
4Ms. Kotz is 59 years of age. Mr. Kotz is 54 years of age.
5Tragedy struck Ms. Kotz in March 2012. She underwent a double lung transplant that unexpectedly resulted in paralysis from the waist down. Then, shortly after the surgery, she suffered a stroke.
6Ms. Kotz remained in hospital after her surgery until she was moved to the Dryden Long Term Care Facility, Princess Court, on August 20, 2014. She has remained at Princess Court since that date.
7On October 14, 2014, a temporary order was issued awarding Ms. Kotz spousal support of $1,400.00 per month, commencing September 1, 2014. Mr. Kotz is current with his spousal support payments pursuant to the temporary order.
8Ms. Kotz receives disability benefits under the Canada Pension Plan (“CPP”) of approximately $11,000.00 per year. This is her sole source of income other than monies that she has withdrawn from her Registered Retirement Savings Plan and the spousal support she receives from Mr. Kotz.
9As of August 1, 2018, Ms. Kotz is charged $1,848.73 per month by Princess Court. This is categorized by Princess Court as the “Basic Long Term Care Home payment.” This payment is subject to a rate reduction if the long term care resident has an annual income in the previous year of less than $23,000.00 - $23,500.00. Ms. Kotz’s disability benefits and temporary spousal support total more than the income that would make her eligible for a rate reduction. From August 2014 to July 2016, the long term care payment has ranged between approximately $750.00 and $1,820.00 per month.
10Mr. Kotz is employed at the Domtar Mill in Dryden. He has worked for Domtar and its predecessors for over 30 years. His income for 2016 was $75,672.00. The parties have used his 2017 income for the purposes of calculating spousal support.
11Through his employment, Mr. Kotz is a member of a group insurance plan with Manulife. He has maintained coverage for Ms. Kotz under the group plan since separation. The group insurance plan includes coverage for Ms. Kotz’s long term care payments in the amount of 95% of the payments. It also provides for extended health care coverage, including prescription drugs, with a co-pay provision. Mr. Kotz testified that he pays approximately $500.00 per month in premiums for this insurance coverage.
12Although insurance coverage has been available to pay for Ms. Kotz’s long term care charges since she went into care in September 2014, claims for these payments and receipts for the payments were not submitted until this issue was canvassed during trial.
13On submission of receipts, Manulife has now paid 95% of the long term care payments going back to September 2014 up to and including August 2018 and 95% of the costs of a wheelchair required by Ms. Kotz. These amounts total $69,320.00. The monies are being held in trust by Mr. Kotz’s lawyer. The insurance payments are non-taxable.
14Ms. Kotz bases her claim for spousal support on a non-compensatory model of need. Mr. Kotz agrees that a non-compensatory approach is appropriate given Ms. Kotz’s history of steady work prior to her medical tragedy in 2013.
Discussion
15There is no question that Ms. Kotz is entitled to spousal support. She has established beyond doubt that she has need. Mr. Kotz has the ability to meet that need. The parties had been married for more than 25 years prior to separation.
16How the Manulife insurance benefits should be treated has added a layer of complexity to what otherwise would be a relatively straight forward calculation of the appropriate quantum of spousal support.
17I have determined that the fairest way to take into account the insurance payments for Ms. Kotz’s long term care costs is that proposed by counsel for Mr. Kotz, namely, to include the insurance payments in Mr. Kotz’s income for purposes of the Spousal Support Advisory Guidelines calculations on the basis that she will receive the full benefit of the insurance monies without having to include the monies in her taxable income.
18Based on an income of $75,672.00 for Mr. Kotz and attributing to Ms. Kotz her CPP benefits of approximately $11,000.00 and the insurance proceeds of 95% of the current long term care costs on a non-taxable basis, the Guidelines indicate a range of spousal support between approximately $1,200.00 and $1,360.00.
19If Ms. Kotz received $1,200.00 per month in spousal support, plus her CPP disability benefits and the Manulife long term care insurance benefits, Mr. Kotz would have 51.6% of net disposable income and Ms. Kotz would have 48.4%, as calculated by the Guidelines.
20I choose the lower end of the range in view of the fact that the Guidelines do not take into account that Mr. Kotz is required to pay, as a deduction from his income, an increased premium for family coverage which he would not otherwise incur and which is not taken into account by the Guidelines.
21I have determined that if Mr. Kotz had paid $1,200.00 per month spousal support from September 2014 through August 1, 2018, and if Ms. Kotz had received the insurance payments from Manulife during that period, he would have overpaid his support obligations by $7,200.00. The overpayment can be funded by the insurance payments that are being held in trust. Of the $69,320.00 held in trust, $62,120.00 shall be paid forthwith to Ms. Kotz and $7,200.00 to Mr. Kotz. Any interest that has accrued on the monies held in trust shall be paid out on a pro rata basis to Ms. Kotz and Mr. Kotz.
22Ms. Kotz seeks retroactive spousal support for the period from March 2013, when she entered the hospital, until September 2014 when she left the hospital and began residing at Princess Court. I will not order retroactive spousal support for the period when Ms. Kotz was in the hospital. She has not established that during that period she had expenses which exceeded her income from CPP disability benefits.
Conclusion
23For the reasons given, an order shall issue that:
- Ms. Kotz shall be paid $62,120.00 from the monies received from Manulife, held in trust by Mr. Kotz’s solicitors. Mr. Kotz shall be paid $7,200.00 from the monies held in trust. In addition, any interest which has accrued on the monies held in trust shall be paid out on a pro rata basis to Ms. Kotz and Mr. Kotz, namely 89.6% of the interest to Ms. Kotz and 10.4% of the interest to Mr. Kotz.
- Commencing September 1, 2018, Mr. Kotz shall pay spousal support to Ms. Kotz in the sum of $1,200.00 per month, based on Mr. Kotz’s 2017 income of $75,672.00 and income for Ms. Kotz consisting of CPP disability payments of $11,000.00 and payments from Manulife, grossed up to $20,740.00 to reflect that the payments are non-taxable.
- Ms. Kotz shall direct Princess Court to send invoices/receipts to Mr. Kotz for the monthly charges for her long term care, as they are issued. Mr. Kotz shall forthwith send the invoices/receipts to Manulife for reimbursement of 95% of the charges as provided for by the Manulife insurance coverage. Mr. Kotz shall forthwith deposit into Ms. Kotz’s bank account all monies he receives from Manulife in reimbursement of the costs of Ms. Kotz’s long term care. Ms. Kotz shall provide Mr. Kotz with the details of her bank account to permit Mr. Kotz to make the deposits.
- Mr. Kotz shall maintain extended health, drug and medical coverage for Ms. Kotz for so long as such coverage is available to him through his employment.
- In addition to depositing into Ms. Kotz’s account the monies received from Manulife for reimbursement of Ms. Kotz’s long term care costs, Mr. Kotz shall forthwith forward to Manulife any other invoices or receipts that he receives from Ms. Kotz for reimbursement of any other of her expenses that are covered under his extended health, medical and drug plan and shall forthwith deposit into Ms. Kotz’s bank account all monies he receives from Manulife in reimbursement of such expenses.
- Mr. Kotz shall designate Ms. Kotz as the sole beneficiary of his group life insurance policy through his employment for so long as he remains employed and is required to pay spousal support. If he fails to maintain this coverage, there shall be a lien and first charge against his estate for the full amount of the policy.
- Commencing September 1, 2019, and on September 1 of each following year, spousal support shall be increased by the increase in the Consumer Price Index for All Items for Canada, not seasonally adjusted, during the previous 12 months.
Costs
24In view of the mixed success of the parties at trial, there shall be no order as to costs.
“original signed by” The Honourable Justice D. C. Shaw
Released: September 13, 2018