Court File and Parties

COURT FILE NO.: 1107/17 DATE: 2018-12-12

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Robert Ryan, Applicant Ms. Alisa P. Williams, for the Applicant

• and -

Cheryl Ryan, Respondent Mr. Frank Lanza, for the Respondent

HEARD: October 30 and November 1, 2018

JUDGMENT

TURNBULL J.

[1] This Motion to Change (to terminate the payment of spousal support as the applicant wishes to retire) and the Cross Motion (the respondent seeks retroactive and increased spousal support from 2015) are brought under the Divorce Act. Counsel agreed that the relevant sections of the Divorce Act are sections 15(2) and section 17. A trial was held during which I had the opportunity to hear viva voce evidence.

[2] The applicant seeks an order that his spousal support obligation to the Respondent contained in their separation agreement be terminated effective June 30, 2021 when the applicant is 58 ½ years old. That is the age at which his pension was valued for equalization purposes.

[3] The respondent seeks retroactive spousal support from 2015 based on the Spousal Support Advisory Guidelines in the midrange amounts based on the applicant’s income of $105,995 to $107,568 during those years. She submits that spousal support should be paid to her until Dec. 31, 2022 based on his current income.

Agreed Facts:

[4] The parties agree to the following facts for the purposes of trial:

1. The Applicant was born on December 25, 1962. He is presently 55 years of age about to turn 56 on Christmas Day.
2. The Respondent was born on January 24, 1963. She is presently 55 years of age and will turn 56 early in the new year.
3. The parties were married on August 24, 1985.
4. The parties separated on September 12, 2003.
5. The parties were divorced on April 3, 2007 by Justice Paisley in Toronto.
6. The parties had two children together, namely Lindsay-Anne Farrell Ryan (born November 5, 1984) and Robert Andrew Ryan (born November 14, 1986). The children are in their 30’s and are no longer dependents.
7. The parties entered into a separation agreement on November 23, 2006. They negotiated that very detailed agreement with both parties having independent legal advice.
8. Spousal support was set at $800.00 per month in the separation agreement payable by the Applicant to the Respondent, with the Applicant being able to deduct the amount of support on his income tax return and the Respondent having to declare the amount of support as income on her income tax return.
9. There was never a court Order pertaining to spousal support.
10. The Applicant paid the Respondent her spousal support directly each month and increased the amount annually in accordance with the indexing clause in the agreement.
11. Paragraph 10(f) of the separation agreement indicates that commencing February 1, 2007, and annually thereafter, the amount of spousal support would increase depending on the Consumer Price Index of Canada.
12. The Applicant’s pension has already been divided with the Respondent in accordance with the separation agreement.
13. The Applicant works for the Toronto District School Board.
14. The Applicant earned approximately $107,568.00 in 2017.
15. The separation agreement lists the Applicant’s income at that time in 2006 as $79,872.00 and the Respondent’s income as $33,000.00. At the time the Applicant was employed by the Toronto District School Board and the Respondent was employed at Beacon Transport in Brampton.
16. Paragraph 10(j) of the separation agreement mandates the parties to exchange their Income Tax Returns with all schedules and attachments each year by June 30th, and our Notices of Assessment no later than August 30th of every year. The Applicant complied with this provision each year.

Material Change in Circumstances

[5] The parties did not argue that the pending retirement of the applicant would not constitute a material change in circumstances, even though it has not yet occurred. Both appeared to simply want to have certainty for their future and hence this matter was before the court. The decision to retire is one of the agreed circumstances which is defined as a material change in circumstances in the separation agreement between the parties. Unless there is a compelling reason to find otherwise, the courts should respect the agreement made by the parties with the advice of counsel. I therefore find that there is a material change in circumstances in this matter which permits the court to proceed to determine the issues argued during this trial.

Overview of the Facts

[6] Ms. Ryan did not work once she realized she was pregnant and remained as home out of the competitive work place for seven or eight years until the children were both in school full time. Sometime in 1988 or 1989, the family moved to Bradford where they assumed the responsibilities of being an apartment building superintendents. Ms. Ryan did most of that work while Mr. Ryan was holding down three jobs for awhile to make ends meet for the family. From 1993 to 1999, Ms. Ryan worked on the floor in sales and as a cashier in a Zellers store. She ultimately became a night shift supervisor which allowed her to be at home with the children before and after school. In 1999, she obtained a job at Beacon Transit Lines in Brampton where she was employed full time during the day with an annual salary $35,000 until 2007. Mr. Ryan agreed that his former wife was a hard worker during her marriage. She had finished grade 12 while he had a grade 13 education, followed by two years at Seneca College in Radio and T.V. arts. He expressed concern at trial that she failed to maintain that willingness to work after they separated.

[7] After the separation in 2003, Ms. Ryan had custody of the two children of the marriage. Pursuant to their separation agreement [1], the applicant paid child support and spousal support as agreed by the parties. It provided that commencing February 1, 2006 the applicant was to start paying spousal support to the respondent in the amount of $800 per month. The parties agreed at that time that his annual income was $79,872 and her annual income was $33,000. The applicant’s obligation to pay spousal support would terminate in the event Ms. Ryan remarried or died. Commencing May 1, 2006, the applicant was obliged to pay monthly child support of $719 per month based on his annual income.

[8] In August 2012, the applicant sent the respondent a letter indicating that he had completed his child support obligations in 2010 [2] and that his financial obligation to pay her entitlement to property equalization (largely made up of her one half interest in his pension) had been paid. He continued paying spousal support only of $800 per month.

[9] By letter dated October 24, 2012, the respondent replied and indicated that using the “MySupport calculator”, the median spousal support payable should be $1500 per month. She chose not to bring a Motion to vary the spousal support provided for in their separation agreement until the applicant initiated these proceedings in October 2017.

[10] The applicant has been employed for 32 years with the Metro Toronto School Board and wishes to retire. As part of their separation agreement Mr. Ryan paid the respondent a lump sum of approximately $84,000 for her interest in his pension. He presently earns approximately $107,000 annually and upon retirement, will receive pension income of $63,000 per year.

[11] From the evidence, Mr. Ryan’s compliance with his obligations under the separation agreement have been exemplary, not having missed any payments nor having failed to provide the respondent full copies of his annual income tax returns and notices of assessment from CRA.

[12] It was not contested that the applicant has paid spousal support to the applicant since September 2003 and any arrears owing as of November 2006 when they signed their separation agreement were quantified at $8,000 which was paid as contracted.

Respondent After Separation

[13] After the separation, Ms. Ryan had trouble finding work in Toronto where the parties were residing at the time of separation. In 2004, even though she knew few people in Hamilton, she moved to Hamilton and bought a house on MacCauley Avenue East for approximately $89,000. She used some of her share of proceeds from the sale of the matrimonial home in Toronto but explained that most of the funds to purchase the house came from her share of the applicant’s pension. She personally worked hard to fix it up, do some renovations and to strip, sand and finish the floors. It was big enough to be able to house her children who were living with her most of the time after separation until they became truly independent and had finished their post-secondary studies. She lived in that home until she sold it in 2016.

[14] Ms. Ryan has had a difficult work history. Her office job with Beacon Transit Lines was terminated in 2007. She successfully took her former employer to the Labour Board and received compensation for the improper termination without appropriate notice. She was working at that job at the time of separation and was making approximately $33,000 per year.

[15] After receiving Employment Insurance benefits, she started her own business in 2008 called Wine to Dine. She ran that business to the end of October 2011 when she suffered a serious wrist fracture while rollerblading which made it impossible to continue to do the tasks associated with operating her business. From my review of her income tax returns and her CRA Notices of Assessment, this was not a very profitable business. That being said, I do not find it unreasonable that the respondent tried to become a self-employed entrepreneur in an effort to become economically self-sufficient.

[16] She worked for a company called Everstaff from December 2011 to March 2012 which was then followed by four years of employment with S&P Data. Her tax returns indicate that her taxable income in that period (which would have included approximately $9,600 for spousal support) was:

2012: $37,920 2013: $38743 2014: $40,601 2015: $37,058

Hence, her employment income in that period was approximately $28,000 to $30,000 per year.

[17] She was terminated from her job at S&P Data in February 2016 which was one of the precipitating factors in her decision to sell her home in Hamilton. In 2016, her total income (which would have included her spousal support of about $9,500) was just $22,713.

[18] When Ms. Ryan sold her Hamilton home in 2016, she testified that from the proceeds, she was able to pay off outstanding debts, and put $80,000 into a GIC. In May 2016, she began co-habiting with Mr. Young, her partner, and has continued to do so to this time. This was not disclosed to the applicant until after the commencement of these proceedings in 2017, approximately 18 months after the fact.

[19] In July 2016, after she began co-habiting with Mr. Young, she took a job with a landscaping company doing heavy outdoor work associated with that type of employment. When she re-applied for a position in February 2017, she was advised they would not be hiring her back.

[20] In January, 2017, she received the first notice from the applicant that he was planning to retire at the end of December 2017 and wished to terminate his spousal support payments at that time. [3] In that letter, he advised the respondent that when he retires, his income will be from his pension plan which had already been divided and the respondent had been paid her share as part of their equalization agreement. The date of his proposed retirement was the earliest retirement date available to him under his OMERS pension at which he would suffer no penalty.

[21] Ms. Ryan responded by letter dated February 28, 2017. [4] She enclosed her income tax returns and Notices of Assessment from CRA for the years 2009 to 2012, which she was to have provided annually to the applicant under their separation agreement.

[22] In September 2017, she began employment in her present job as a hearing consultant at Hear Right Canada in Caledonia Ontario where she is paid approximately $35,000 per year.

[23] The respondent’s partner Mr. Young testified. He is a long time employee of Arcelor Mittal in Hamilton and will earn approximately $95,000 in 2018. He was called as a witness by Ms. Williams. He agreed that he and the respondent have essentially been a couple since 2014. In 2016, Ms. Ryan finally moved into his residence where they have co-habited to this date. He testified that they have never discussed the possibility of living in separate dwellings.

[24] Ms. Ryan purchased a house in July 2018 which required extensive renovations. She testified that starting in late August, she began renovating the house, working as much as 10 hours per week to get it ready for occupancy.

[25] She explained she purchased it as her retirement investment to give her security. Contrary to her partner, she testified that she plans to move into that house when the renovations are completed. Frankly, I do not believe her when she says she intends to move there while continuing her relationship with her partner. I accept that she probably will rent the house out as an income producing property which is something her partner indicated he thought was a real possibility. Alternatively, she and her partner may decide to move to that residence and rent out his property which is a cottage property near Lake Erie. I believe that Ms. Ryan has tailored her evidence to escape the suggestion that in considering her household and living expenses, her partner will be able to easily contribute one half of the expenses. I am reaffirmed in my belief in that respect by virtue of the fact she did not disclose to the applicant that she was co-habiting with Mr. Young since May 2016 until these proceedings were initiated late in 2017.

Applicant After Separation:

[26] In 2014, the applicant began co-habiting with a new partner. She works for the same employer as the applicant and earns approximately $117,000 per year as of the date of this trial. They live in her home in Pickering and share an interest in a condominium located at Yonge Street and Finch Avenue in Toronto. The fact they were co-habiting was disclosed in his 2014 tax return which was produced to the respondent in a timely manner.

[27] In the same year, 2014, Mr. Ryan received a significant promotion at work. I accept his evidence that he had taken a number of courses and had attained accreditation as a certified Human Resources consultant. His salary increased from $95,000 in 2014 to $107,000 which he earned in 2017. His former position was one which he held from 2001, prior to the separation. The salary from that former position was the $79,872 upon which his spousal support and child support obligations were agreed.

[28] His 2014 and 2015 income tax information was provided to the respondent in accordance with their agreement and it showed his employment income had increased to $104,283 for 2014 and 106,404 for 2015, but the respondent did not bring a motion to vary. The 2016 Notice of Assessment received in early 2017 showed his income for tax year 2016 was $105,995. In 2017, his income rose to $107,568. [5]

The Law:

[29] The Supreme Court of Canada has ruled that all the objectives of sections 15(7) and 17(7) of the Divorce Act must be taken into account when spousal support is claimed or a variation is sought. [6] Those factors are:

o (a) recognize any economic advantages or disadvantages to the former spouses arising from the marriage or its breakdown; o (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; o (c) relieve any economic hardship of the former spouses arising from the breakdown of the marriage; and o (d) in so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time.

[30] In the case of Bullock v. Bullock where the court determined that it should consider the payor’s choice of retirement date in relation to what is reasonable for both payor and recipient having regard to their aggregate retirement resources and the ability of these resources to provide reasonable standards of living for both parties. That test was adopted by MacKinnon J. in Walts v Walts, 2016 ONSC 4277 at para 19. I find it is directly applicable to the case at bar.

[31] Pomerance J. of this court has held that the right to retire is not determinative of the issue of whether there is a material change of circumstances warranting a variation of spousal support. [7] She noted at para.13 that “parties cannot sidestep support obligations by unilaterally deciding to leave the workforce”.

[32] From a policy point of view, retirement does not always result in a variation order reducing spousal support obligations because it would enable a means to defeat spousal support orders which would ignore the compensation aspect of the analysis in Bracklow v. Bracklow, [1999] 1 S.C.R. 420. [8]

Analysis

Claim for Retroactive Spousal Support:

[33] It is clear that based on the Spousal Support Guidelines, the applicant has benefited significantly from paying a lower amount for spousal support than he otherwise would have been liable to, from 2012 to present (once his obligation to pay child support terminated) [9]. However, the respondent was aware of that fact and chose not to seek an order varying it until 2017. Even then, she had not disclosed the fact that she was co-habiting with Mr. Young since at least 2016. Furthermore, from the record before the court, the respondent has not provided her tax returns and Notices of Assessment from the Canada Revenue Agency in a timely way.

[34] I do not feel that this is a case where retroactive spousal support should be ordered from 2015. Mr. Ryan has faithfully complied with virtually every detail of his required disclosure and payments under the separation agreement. To suddenly burden him with a large capital payment because of the delay of the respondent in enforcing her rights would be tantamount to rewarding her for “sitting in the bushes”.

[35] I do find that he had notice of this retroactive spousal support claim late in 2018 and therefore it is ordered that he is responsible for retroactive spousal support from January 1, 2018 to date, with credit of course for the amounts paid by him monthly in that period.

Compensatory Support

[36] Mr. Lanza has urged the court to vary the spousal support order on the basis that his client is entitled to compensatory support which is not reflected in the parties’ agreement nor in the amounts paid to her since 2012. The applicant has paid $800 per month spousal support since the separation agreement has been signed.

[37] The respondent has a grade 12 education. When she became pregnant with their first child at age 21, she gave up her job in British Columbia and returned to Ontario to live with the applicant and raise their child. As stated above, she then effectively remained out of the competitive work place for approximately eight years until their children were enrolled in school. In 1993, she began to work at Zellers on the evening shift on the floor and as a cashier.

[38] All that time, the respondent was working very hard to provide the money to feed their growing family. At one stage, he was working three jobs. One of those jobs was teaching night school for three hours per evening, two days per week. At that time, he was enrolled with OMERS as one of the jobs he had was with the TDSB where he has been employed for 32 years at the time of this trial. When ultimately he was offered a position with the York Board of Education, he was able to take his OMERS pension with him as he assumed the role of a teaching aids technician or media aids technician. He was able to get that job because the person who previously held it obtained a full time teaching position. In due course, he was promoted to supervisor of media specialists in 1991 or 1992. In 2001, all the school boards in the Metro Toronto area amalgamated into one Board, the TDSB. He was placed in a new building and the staff asked him to do some team building exercises with them and in due course, he applied for a position as part of a leadership development program for managers and co-ordinators. He was successful in obtaining that position and his career progressed from that point to his current job with the same employer. From 2001 to 2014, he held the position of Professional Staff Developer.

[39] I find that the respondent has suffered an economic disadvantage arising from the marriage and the subsequent breakdown of the marriage. I find that there should be a compensatory component to the spousal support payable by the applicant from this time to the date of termination on December 31, 2022.

[40] The applicant was able to get a job with his present employer during the marriage and as a result of a number of opportunities that opened up to him during the marriage. It is not lost on this court that once someone gets a job with a governmental or quasi-governmental organization where the pay cheque comes from public funds, it is not too often that one loses that job or is thereafter forced to change jobs. At the same time, a generous pension plan is available to the applicant and other employees of the TDSB which is evident in this case. To Mr. Ryan’s credit, he has taken courses and improved his qualifications to such an extent that he was offered a significant promotion in 2014.

[41] Being married at a young age and then being out of the workforce for eight years as she remained at home with the children, has resulted in the applicant losing the opportunity to upgrade her skills when she was young to be able to obtain better paying employment. At the same time, she conferred a significant benefit on the applicant in that he was able to determine his career path and make the initial contacts which led to his ultimate employment with the TDSB. She has suffered an economic disadvantage in the marriage which should be subject to a compensatory recognition in spousal support. I further note that after the separation, except for her daughter who lived with her father for one year, both the children lived with her while they attended Mohawk College in Hamilton. Andrew continued to live with her until 2012 and at about that time, child support was terminated.

[42] Ms. Ryan explained that upon their separation, the parties sold their house on Church Street in Toronto. She took the proceeds from that sale and her equalization payment and wisely invested the proceeds in the purchase of the MacCauley Street residence. She now has again invested them wisely in the purchase of a residential property in Hagersville. She appears to have worked hard in a variety of relatively low paying jobs over the years, just as she did during the marriage. Mr. Ryan agreed that during their marriage he found her to be a hard worker, though he felt that was not the case after separation as he considered her work history from that time. On the evidence before this court, I find that she has made reasonable efforts to become self-sufficient.

Double Dipping

[43] In Boston v. Boston, [2001] 2 S.C.R. 413 the SCC wrestled with the troublesome issue of “double dipping”.

[44] It is generally unfair to allow the payee spouse to reap the benefit of the pension both as an asset and then again as a source of income. This is particularly true where the payee spouse receives capital assets which she then retains to grow her estate. The starting point has to be that double recovery is not defensible in most cases.

[45] But this is not an absolute rule and is dependent on the circumstances of each case. The court in Boston, supra, stated at para. 63:

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.

[46] In my view, that paragraph is applicable to the case at bar.

[47] In this case, the respondent received approximately $84,000 as the capital sum equalling one half of the applicant’s pension at the date of separation. She explained in her evidence, her inability to find affordable housing in Toronto and so in 2004, she moved to Hamilton to purchase a single family home on MacCauley Street. This, in my view, was a wise investment of her capital. It not only provided a home in which she and her children could reside, but it also constituted an appreciating asset in a buoyant real estate market enjoyed by homeowners in the Greater Hamilton area in the 2004 to 2014 period. She ultimately sold that asset at a considerably increased price over the original purchase price which would have constituted a tax free gain on the sale of her principal residence.

[48] After child support was terminated around 2012, she never brought an application for increased spousal support from that time to the time of her cross motion in these proceedings, late in 2017. She agreed that the cross motion was brought as a response to the applicant’s motion, not just as a result of her need for that support.

[49] From the review of her work history, Ms. Ryan appears to have tried to work within her capabilities after the parties’ separated and has made reasonable efforts to become economically self-sufficient.

[50] I am aware of the applicant’s concern that if he is obliged to pay spousal support to the end of 2022 and he chooses to retire in the interim, that may be perceived as “double dipping”. However, as I said, the decision to retire at a relatively young age when he is in good health, will be, his and is not being imposed on him. He indicated that due to some bridging issues relative to his pension that it was important to be able to make that decision sooner than later. He can still do what he wants to do, after weighing the financial effects of this order.

[51] The respondent is presently working and earning approximately $35,000 per year. She enjoys the financial benefit of living with Mr. Young, who has good income from his employment. It means that her costs of living will be somewhat reduced as they share expenses. I have taken that into account in my decision. That being said, the applicant enjoys the same benefit of living with his partner who works at the same place of work and has a salary slightly higher than his.

[52] Mr. Lanza has helpfully given me a series of Tools One Spousal Support Guideline print-outs for the periods 2015-2018. In them, he has used the 2014 income of the applicant which was $95,000 and on one of them, he has used the respondent’s current annual employment income of $35,000 per year. Mr. Ryan was earning that income in the same position he held at the time of the separation. Mr. Lanza quite properly agreed that the increased income enjoyed by Mr. Ryan after 2014 was as a result of Mr. Ryan’s initiative to upgrade his qualifications and to undertake professional development which occurred after the separation. Hence he submitted that the applicant’s obligation for spousal support should be based on the salary figure of $95,000. I concur.

[53] In my view, based on her earlier career employment earnings the respondent is capable (as evidenced by her current employment) of earning $35,000 per year.

[54] It is ordered that the applicant shall commence paying spousal support to the respondent in the midpoint SSAG amount of $1700 per month on January 1, 2018 and shall continue to do so until December 31, 2022. This extends beyond the Spousal Support Guideline period for the payment of spousal support (about 19 years for a 19 year relationship and marriage) but it reflects a compensatory amount not reflected in the separation agreement, a recognition that the applicant has underpaid spousal support by about $10,000 per year for about seven years, and that the applicant has a need to be able to financially prepare herself for her retirement, whenever she elects to do that.

[55] This will mean that the respondent will receive approximately $20,400 per year of spousal support for four years which will allow her fulfill the evident economic need she has of being able to put some money aside for her retirement.

[56] If the applicant continues to work to the age 60, his spousal support obligation will end at that time which will allow him to retire at a reasonably young age if he chooses to work to that age. Regardless, it will give him a good picture of his financial obligations and limitations when he makes a decision to notify his employer of his retirement date.

Costs

[57] In the circumstances, each party will pay his/her own costs. There has been divided success as the respondent has been denied her claim for retroactive spousal support but has been successful in having increased support paid to her until December 31, 2022. Furthermore, I do not consider it unreasonable that the applicant has brought this motion to vary in light of the definition of material change in the parties’ separation agreement.

Turnbull J.

Released: December 12, 2018