Court File and Parties
COURT FILE NO.: FS-18-2851 DATE: 20190305 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: Galo Angulo, Applicant – and – Shirley Reva Angulo, Respondent
Counsel: Lindsay G. Mills, for the Applicant Sana Khokhar, for the Respondent
HEARD at Toronto: January 29, 2019
Reasons for judgment C. Horkins J.
Introduction
[1] There are two motions before the Court.
[2] The applicant, Galo Angulo (“Galo”), brings a motion to change the final order of Justice C.M. Sharpe dated June 11, 2004 (“Sharpe order”). That order requires Galo to pay the respondent, Shirley Reva Angulo (“Shirley”) spousal support of $1,400 a month.
[3] Galo retired on May 31, 2018. He asks the court to terminate spousal support effective May 31, 2018 along with the requirement that he maintain life insurance to secure the support.
[4] Galo issued his Motion to Change the Sharpe order on May 31, 2018. The hearing of his motion was set for November 2, 2018 and adjourned at Shirley’s request to January 29, 2019. The parties agreed to waive a settlement conference and have Galo’s motion decided on affidavits with no questioning.
[5] Six days before the hearing of Galo’s motion, Shirley served a cross-motion seeking her own relief. Shirley’s long motion was not scheduled as required and she never indicated her intention to bring such a motion. Nevertheless, Galo agreed to have it proceed at the same time.
[6] Shirley seeks various relief. She asks the court to dismiss Galo’s motion because she states that disclosure is required. Shirley wants an order directing Galo to provide full financial disclosure from 2005 - 2018 and an order that he pay retroactive spousal support. Shirley also wants an order requiring Galo to obtain “full financial disclosure” from his current wife, so that the second wife’s annual income and expenses are known.
[7] Shirley also wants an order directing Galo to obtain an assessment from a Certified Business Valuator (“Valuator”) to determine what portion of his RRSP is attributable to post-separation growth. She wants the Valuator to calculate Galo’s income for the purpose of determining spousal support retroactively and ongoing.
[8] Shirley wants an order directing Galo to continue to pay spousal support. She seeks a variation of the Sharpe order to increase the monthly spousal support that Galo must pay. Initially, in her affidavit responding to Galo’s motion, Shirley requested an increase to $3,990 a month, based on an income of “at least” $140,000. Shirley states that $140,000 consists of Galo’s retirement income and money that she alleges he is hiding by registering investments in the name of his second wife.
[9] In her notice of motion, Shirley seeks an increase in spousal support to $1,916. The requirement to obtain life insurance would continue. This position is based on imputing income of $53,200 to Galo and adding it to his retirement income. This is premised on Shirley’s position that Galo can earn income in some capacity and/or is hiding money with his wife. Shirley adds imputed income of $53,200 to Galo’s retirement income. On this basis, she states that his total income from all sources is $86,792.
[10] During the hearing of the motions, Shirley limited the duration of the ongoing spousal support that she seeks. She wants spousal support to continue for another 2 to 3 years.
[11] Shirley did not ask for an adjournment. Both parties confirmed their readiness to proceed with the motions.
Background Facts
[12] The parties were married on October 8, 1972 when Galo was 19 years old and Shirley was 27 years old. During the marriage, the parties had two children. Both are now adults and financially independent. The parties separated on November 18, 2000 and divorced in June 2003.
[13] Galo remarried and has two dependent children from this marriage, ages 10 and 12. He is now 68 years of age. Galo retired on May 31, 2018 at the age of 67.
[14] Shirley did not remarry. She retired at the age of 65 and is now 76 years of age.
The Separation Agreement
[15] The parties executed a separation agreement dated May 8, 2002 (the "Separation Agreement") that settled all disputes arising from the breakdown of their marriage. They each received independent legal advice before signing the Separation Agreement. The terms of this Separation Agreement are relevant to the relief that is requested.
[16] The Separation Agreement provided for the sale of the matrimonial home and an equalization payment. The matrimonial home sale proceeds were divided equally and Galo paid Shirley $40,000 from his 50% share. As part of the equalization, their pensions and RRSPs were equalized. Galo transferred $60,000 from his RRSP to Shirley’s RRSP account.
[17] The Separation Agreement recorded that Galo earned $140,000 and Shirley earned $21,632. The Separation Agreement required Galo to pay Shirley $2,700 a month for spousal support.
[18] Paras. 9.2 to 9.6 of the Separation Agreement, set out below, provided for an annual change to spousal support. There was to be a “change” in spousal support “equal to 100% of the percentage change in the Consumer Price Index”. The change could be up or down depending on the index. In a year when Galo’s income and the CPI increased, Galo had the option to choose the lesser increase and use this amount to change spousal support:
9.2 The amount of support payable pursuant to paragraph 8.1 herein will change at one year intervals, on the anniversary of the signing of this Separation Agreement, in accordance with the All Items Consumer Price Index for the Province of Ontario (not seasonally adjusted), with base year 1992 equal to 100, as provided by Statistics Canada.
9.3 This change in amount will occur on the anniversary of each year in which support is payable starting with the first day of the first month after the closing of the sale of the matrimonial home commencing in 2003. This change will be equal to 100% of the percentage change in the Consumer Price Index.
9.4 In the case of an increase, if in any such year the Husband's income as defined in the Income Tax Act, for the month-to-month period prior to the proposed increase, does not increase at the same or greater percentage than the percentage increase in the cost of living calculated in paragraph 8.3 above, at the Husband's option, the increase will be equal to the actual percentage increase in his income so calculated.
9.5 In any event, at the option of the Husband, the change in support will be the lesser of an increase of income by the Husband or the Consumer Price Index figure.
9.6 The parties acknowledge and agree that all support payments made by the Husband to the Wife pursuant to this Separation Agreement after the effective date shall be deemed deductible by the Husband as periodic payments and includable by the Wife in the calculation of their incomes for tax purposes and considered as having been paid and received pursuant to the provisions of subsection 56.1 (3) and subsection 60.1(3) of the Income Tax Act [emphasis in original].
[19] There is no evidence that the parties ever discussed the annual change in spousal support that is addressed in paras. 9.2- 9.6 of the Separation Agreement and it was never followed.
[20] Para. 16 of the Separation Agreement allows a variation of the spousal support (in para. 9) and the life insurance requirement (in para 11), if there is a material change in circumstances. In particular, para. 16.3 states:
16.3 Obligations arising out of the remarriage of the Husband or the Wife are to be taken into account in determining whether there has been a material change in circumstances.
[21] Para. 20, is the “Full and Final Settlement” clause in the Separation Agreement. It states as follows:
20.1 Further the parties agree that the support and property division of this agreement are inextricably intertwined and constitute and full and final financial settlement. More particularly, the husband and the wife acknowledge that he and she may be called upon during the rest of their lives to use, either wholly or in part, their capital for his or her own support and they agree to do so without recourse to the other.
[ Emphasis added]
[22] Para. 22.1 of the Separation Agreement states that para. 9, dealing with spousal support “shall be incorporated into the Divorce Judgment”. A Divorce Judgment was issued on May 12, 2003 but did not include any reference to spousal support.
The Applicant’s Employment History and Retirement
[23] In 2000, when the parties separated, Galo was a self-employed computer programmer and worked on a contract basis with a bank. As noted, he earned $140,000.
[24] In September 2002, a few months after the Separation Agreement was signed, Galo’s consulting contract was terminated. He was unemployed until November 2003. While Galo was unemployed, he took courses at a College to improve his chance of finding a job and used his savings to pay spousal support while he was unemployed.
[25] In November 2003, Galo secured a new full-time job with CIBC at a lower salary of $73,000, plus a pension.
[26] The parties could not agree on the spousal support that should be paid given Galo’s drop in income. Both brought motions seeking an order for spousal support. Shirley sought an order that Galo pay $2,500/month for spousal support. Galo sought an order that he pay $1,000/month for spousal support.
[27] The parties settled their motions and agreed to the consent order of Justice Sharpe dated June 11, 2004. It is the Sharpe order that Galo now seeks to change. The order provides as follows:
- Commencing April 1, 2004, Galo pays Shirley $1,400/month for spousal support
- That there were “no arrears outstanding for support payable to [Shirley] under the Separation Agreement between the parties”.
- That Shirley will continue to pay $236.74/month on a line of credit in Galo’s name until the principal and interest are retired.
- That there will be no costs of the motions.
- That payment of the spousal support will be enforced by Family Responsibility Office.
[28] At CIBC, Galo worked as an advisor helping to make changes to a computer legacy system that had been initially developed in the early 1980s. Today the system is being redesigned using new technology and skills that Galo does not possess. It would take Galo several years to acquire the new skills necessary to work with the new technology. Galo would have to bear any costs to "retool" and would not be guaranteed a job if he successfully upgraded his skills. If Galo did upgrade his skills, he would have to compete with new and younger talent from Canada and abroad for employment in this area.
[29] Galo was employed by CIBC for approximately 14.5 years. He retired from CIBC effective May 31, 2018. He was almost 68 years of age at that time. The responsibilities of his job had become too physically and mentally demanding for him. He was often required to work 18 hours a day and take phone calls and requests at all hours. He states that the job was taking a toll on his physical and mental health.
[30] Galo has a sciatic problem with his back and a torn ACL, which limit his mobility. He depends on pain killers and was diagnosed with degenerative disc disease of the lumber spine. He was recently diagnosed with prostate issues that will need be treated. Galo is also being treated for high blood pressure. His father and grandmother passed away from complications due to high blood pressure. While Galo’s medical problems are confirmed in a letter from his family doctor and a letter from his physiotherapist, neither letter states that the medical problems required him to retire when he did.
[31] Notwithstanding his health issues and the demands of his job, Galo says that his age and almost obsolete skills made retirement a foregone conclusion. There were younger people, with better skills to do his job.
[32] Galo was not fired or asked to retire. Based on the above circumstances, he decided that retirement was “obvious”.
[33] Galo emailed Shirley on January 10, 2018 to tell her that he was retiring from CIBC on May 31, 2018, that the $1,400 monthly support payments would cease on this date and that he was taking the necessary steps to inform the Family Responsibility Office.
[34] Shirley responded on January 25, 2018 and told Galo that she did not agree to terminate spousal support.
[35] Galo proceeded to retire from his employment on May 31, 2018. He has continued to pay the monthly spousal support pending the outcome of this motion.
[36] His total annual income is now approximately $32,557.20. The monthly gross income is comprised of his CIBC pension in the amount of $1,081.07 per month ($136.08 of which is clawed back for the benefits payment), CPP in the amount of $1,045.37 and OAS (which he is now receiving) in the amount of $586.66.
[37] Galo’s wife earns $125,000/year plus a discretionary bonus. They have been sharing the household expenses. They have two children ages 9 and 12. Expenses for their activities run about $1,500/month and Galo is trying to save money for their post-secondary education.
[38] Going forward, Galo will have to rely on his capitol to pay his share of the family’s expenses.
[39] Galo’s financial statement shows monthly expenses of $11,329.84. This is based on his 50% contribution to the joint family expenses including the children.
[40] Shirley alleges that Galo’s annual income is now $140,000, but has provided no proof to substantiate this amount. The basis for her assertion is Shirley’s mere suspicion that Galo’s wife is somehow holding property in trust for him or that he is hiding income with his wife. Galo’s wife is employed at a bank and has strict reporting obligations of all her accounts and investments. Shirley’s allegations are vigorously denied.
Shirley’s Financial Circumstances
[41] During her working life, Shirley worked in a clerical type job. She earned $21,600 when the Separation Agreement was signed. In the years that followed, she generally earned around minimum wage or more.
[42] Shirley voluntarily retired when she was 65. She will be 76 years old this year and says that she cannot be expected to work. Galo does not argue that she should work.
[43] Shirley states that she has various health problems. She has had two knee replacements and a third is pending. She has degenerative disc disease and heart problems. Shirley has a pacemaker and has bouts of dizziness. There are no medical reports to substantiate her medical issues.
[44] Shirley states that in 2017, she had income of $37,566 (this consisted of OAS, CPP, RRIF/LIF withdrawal, taxable dividends and an Ontario Trillium Benefit). In addition, Shirley received $16,800 in spousal support. She states that she pays for some of the grandchildren’s expenses and covers her adult son’s vehicle expense. Shirley says that for the last 10 years she has withdrawn about $21,000/ year from her RRIF to “make ends meet”.
[45] Shirley’s financial statement shows monthly expenses of $6,101.91. This includes $500 a month for the expense of the grandchildren. In the last year, Shirley has paid $2,400 for their son’s car repairs and spent $9,500 on home improvements.
[46] Shirley owns a home in Oakville. There is a dispute between the parties about whether Shirley earns undeclared income from the rental of her finished basement. She says that she has allowed friends and family to stay in the finished basement. In exchange they have contributed to her expenses. There is no rental income disclosed on Shirley’s financial statement.
[47] Galo states that Shirley rents the basement and does not disclose the rent. He filed an affidavit from their son. In 2006, he paid his mother $500 a month to rent the basement. The son states that his mother has rented the basement off and on over the years and he believes she is currently renting it out.
[48] It is apparent that Shirley could earn extra income by renting her basement because she has done so.
Comparison of Parties Financial Positions
[49] Shirley states that there is a huge disparity between the parties’ financial circumstances. This is not supported by the evidence. The following chart shows that the parties’ financial positions are not that different. Galo’s net worth is $877,162 and Shirley’s net worth is $713,864:
| Galo | Shirley | |
|---|---|---|
| 2019 Income (post-retirement; without including spousal support) | $33,592.44 | $37,566.48* |
| Real Estate | $850,000.00* | $650,000.00 |
| Vehicles | $45,250.00 | $13,500.00 |
| Savings/RRSPS/Investments | $387,163.04 | $347,951.56 |
| Bank Accounts | $463.73 | $3,982.34 |
| Mortgage/Line of Credit | ($438,264.87)* | ($299,456.23) |
*This does not include rental income discussed above. **This assumes Galo has a 50% share in the value of matrimonial home, even though the home is solely in his wife’s name.
Spousal Support Payments/ Alleged Arrears
[50] Galo has paid $1,400/month for spousal support since the Sharpe order. The support has been paid through the Family Responsibility Office and has never been in arrears. Galo has always maintained the necessary life insurance. Pending the outcome of his motion, Galo has continued to pay spousal support directly since it cannot be collected by the Family Responsibility Office.
[51] It is Shirley’s position that the Separation Agreement required Galo to adjust spousal support each year and this was never done. In her cross-motion, Shirley seeks an order for payment of spousal support arrears to reflect the increase that Galo should have paid according to the Separation Agreement. She does not have Galo’s income tax returns for 2005 - 2014. For this period of time, she relies on the CPI and calculates his arrears at $17,627.26. For the years 2015 - 2018, Galo’s income tax returns are available. She calculates his arrears for this period at $64,672.
Analysis
[52] I start with Shirley’s request to dismiss Galo’s motion so that she can obtain disclosure and a valuation of the growth in Galo’s savings since separation.
[53] Shirley wants Galo to produce “full financial disclosure” from his wife because she believes that Galo’s wife is secretly holding Galo’s assets and is colluding with Galo who is attempting to evade paying spousal support. Shirley also wants all of Galo’s income tax returns and Notice of Assessment from 2004 to date so that she can calculate the annual spousal support increases that were not paid.
[54] The request for extensive disclosure and a valuation is denied. My reasons follow.
Disclosure from Galo’s Wife
[55] The request for this disclosure is premised on mere speculation and is unreasonable.
[56] In his sworn financial statement, Galo disclosed his wife’s income and their equal sharing of expenses. This level of disclosure from a new partner is typically sufficient (as in this case), to address the financial circumstances of a payor or payee, who has a new partner. There is no right to disclosure beyond these essential facts.
[57] A former spouse is not entitled to the “full financial picture” of a spouse’s new partner by right. Such disclosure would be extensive and intrusive. As Justice Kristjanson stated in Politis v. Politis, 2018 ONSC 323 at para. 17:
Compelling the production of personal income, asset and other financial information of new life partners is highly invasive of personal privacy and generally of minimal relevance. The privacy interests of third party new partners must be carefully balanced against the interests of the parties to the family law proceeding, and any production order carefully scrutinized.
[58] Finally, the evidence does not support Shirley’s assertion that Galo and his wife are colluding so that Galo can evade paying spousal support. To the contrary, Galo continued to work past the typical retirement age of 65. He gave Shirley notice of his intention to retire before turning 68 and has continued to pay spousal support pending the outcome of his motion. The evidence shows that his decision to retire was a reasonable one based on his circumstances. It was not orchestrated to avoid paying spousal support.
Disclosure of Income Tax Returns and Notices of Assessment from 2004 to Date
[59] When Galo filed his Motion to Change the Sharpe order he filed his Certificate of Financial Disclosure that included income tax returns for 2014 - 2017 and his Notices of Assessment for 2014 - 2016.
[60] Shirley wants Galo to produce his income tax returns and Notices of Assessment for the years 2004 to 2013. This request is premised on her position that paras. 9.2 - 9.6 of the Separation Agreement continued to apply when the Sharpe order was issued.
[61] As noted above, this part of the Separation Agreement set out a process for changing spousal support each year. The Separation Agreement provided for a “change” in spousal support “equal to 100% of the percentage change in the Consumer Price Index”. The change could be up or down depending on the index. In a year when Galo’s income and the CPI increased, Galo had the option to choose the lesser increase and use this amount to change spousal support.
[62] During the motions and negotiations that led to the consent Sharpe order, there is no evidence that the parties ever discussed the annual change of spousal support that is set out in paras. 9.2 - 9.6 of the Separation Agreement. There is also no evidence that the annual change was discussed, in any way, during the many years after the Sharpe order.
[63] When Galo was unemployed in 2002 for more than a year, this led both parties to bring a motion for a spousal support order. The Separation Agreement required Galo to pay $2,700/month. During the motions, both parties were represented by counsel. They settled the motions and agreed to reduce monthly spousal support to $1,400, as reflected in the Sharpe order.
[64] Some of the motion material that led to the Sharpe order has been produced. Neither the motion material nor the Sharpe order make any reference to the annual change in spousal support dealt with in the Separation Agreement. The Sharpe order does not require this yearly adjustment.
[65] The Sharpe order directed that the $1,400 spousal support order be collected and enforced by Family Responsibility Office and this is what happened.
[66] In Shirley’s Response to Motion to Change dated August 22, 2018, she did not claim arrears of spousal support. The issue of the annual change is not mentioned in her Response.
[67] In Shirley’s supporting affidavit dated August 22, 2018, she states the Galo has paid all of the spousal support owing except for August, a month that had yet to be collected by Family Responsibility Office.
[68] The parties and their counsel attended before the DRO and no disclosure orders were made. The parties agreed to waive a settlement conference and proceed with Galo’s motion to change. No production requests were made leading up to the motion date.
[69] Shirley raised the annual change issue for the first time when she filed her January 21, 2019 affidavit to support her own motion. For the first time, she alleges that Galo owes spousal support arrears of $82,199.26, retroactive to June 11, 2004, the date of the Sharpe order.
[70] Why did Shirley wait until 2019 to tell Galo that in her view, spousal support should have been changed annually? It is Shirley’s evidence that she never asked Galo for his income tax returns and/or the annual change because she feared he would stop paying spousal support. She claims that Galo has a short temper and has “in the past” been abusive to her. She claims that Galo intimidated her and that this is why she agreed to a reduced spousal support in the Sharpe order. She says that she feared Galo would “starve her into submission” if she pursued the annual change of spousal support.
[71] Shirley’s evidence about intimidation, fear and abusive conduct does not have the ring of truth. Shirley’s evidence consists of general allegations raised on these motions at the last minute.
[72] The Family Responsibility Office has administered the spousal support pursuant to the Sharpe order. Because the Sharpe order did not include an order for an annual change in spousal support, the Family Responsibility Office never collected any increase in spousal support.
[73] Galo has paid monthly spousal support of $1,400 for more than fourteen years. During this 14 year period there is no evidence that Shirley ever asked Galo, the Family Responsibility Office, her lawyer or anyone else, about the annual change. Instead, Shirley raised the annual change issue for the first time in January 2019.
[74] Shirley implies that she was intimidated into agreeing to the Sharpe order. Shirley was represented by counsel and consented to the order. I reject her last minute assertion of intimidation. She may not have liked the Sharpe order but there was a legitimate reason for the reduction in spousal support.
[75] Galo’s evidence on this motion shows that his loss of employment in 2002 was legitimate. He worked hard to find alternative employment and continued to pay spousal support as he could, while he looked for a new job. His income dropped dramatically and this supported the drop in spousal support from $2,700 to $1,400 a month.
[76] Following separation, the parties shared custody of a dog for eight years. Galo went to Shirley’s home to pick up and drop off the dog. There is no corroborating evidence of intimidating or abusive contact during the pet drop offs, or at any time in the past.
[77] The parties consented to vary the Separation Agreement and in doing so they agreed to the terms of the Sharpe order. They could have included the annual change in the Sharpe order and they did not do so. If Shirley thought that it continued to apply she could have raised it with Galo, the Family Responsibility Office and/or her counsel. The fact that Shirley is seeking to enforce the increase retroactively 14 years later and has never pursued it before, supports my finding that it was not intended to be part of the Sharpe order.
[78] Even if I were to find that paras. 9.2 - 9.6 of the Separation Agreement continue to apply, I would not make the far reaching retroactive order that Shirley requests.
[79] A request for retroactive spousal support is subject to judicial discretion. The court must consider the recipient’s needs, the conduct of the payor, any hardship the retroactive award may occasion on the payor, and the reason for the delay in seeking support. (Kerr v. Baranow, 2011 SCC 10 at para 207; S.P. v. R.P., 2011 ONCA 336). A consideration of these factors does not favour a retroactive spousal support award.
[80] As I have explained, Shirley’s explanation for why she waited until 2019 to claim the past annual adjustments is not convincing. Furthermore, until her January 21, 2019 affidavit, she represented to Galo, the DRO and the Court that Galo did not owe any spousal support arrears.
[81] For more than 14 years, Galo’s has done what he was ordered to do. He paid monthly spousal support of $1,400, as directed in the Sharpe order. He is now retired with 2 dependent children and lives on a fixed retirement income. It would be most unfair and a hardship to order Galo to pay Shirley $82,199.26, when the Sharpe order did not require an annual change for spousal support.
[82] Finally, Shirley’s needs do not justify the retroactive award. She has considerable equity in her home and could continue to earn rental income. The parties agreed in para. 20.1 of the Separation Agreement that “he and she may be called upon during the rest of their lives to use, either wholly or in part, their capital for his or her own support and they agree to do so without recourse to the other”.
[83] In these circumstances, I would not order Galo to pay the alleged retroactive spousal support, if I had found that the annual change clause in the Separation Agreement applied to the Sharpe order.
[84] Finally, I note that Galo does not agree with Shirley’s calculation of the alleged spousal support arrears. Since I am not allowing Shirley’s request for spousal support arrears, it is not necessary to decide the exact amount in question.
Request for a Valuation
[85] Shirley seeks an order directing Galo to obtain a valuation of the growth in his RRSP post-separation and a determination of the income from this growth. This request is denied.
[86] The financial circumstances of the parties is straightforward. Galo produced the financial statements that he filed in 2001 and 2004. The 2004 financial statement was prepared during the motions that led to the Sharpe order. In 2004, the value of Galo’s RRSP reflected in the 2001 financial statement had been equalized. In 2004, the value was $84,072 and his locked in RRSP was worth $28,346. The increase in value in these RRSPs is known. Galo’s current financial statement shows that his RRSP is valued at $325,145 and the locked in RRSP is valued at $41,970. There is no need to retain a valuator to identify this growth that is obvious.
[87] There is also no need to retain a valuator to calculate the income that this money will generate. Today, the value of Galo and Shirley’s savings is similar as noted on the above chart. Therefore they should both be able to generate more or less the same level of income going forward. They both will need to rely on their savings going forward. This is exactly what they agreed to in para. 20.1 of the Separation Agreement.
Material Change and Termination of Spousal Support
Analysis
Legal Framework
[88] Section 17(1) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) provides that 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”.
[89] Before a spousal support order can be varied, s. 17(4.1) of the Divorce Act requires that: "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".
[90] Finally, s. 17(7) states that a variation order that varies a spousal support order should do the following:
(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.
[91] The Supreme Court of Canada established the analysis to be applied by the court in considering a variation application in Willick v. Willick, [1994] 3 S.C.R. 670 (S.C.C.), at p. 688, as follows:
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 in circumstances.
In deciding whether the conditions for variation exist, it is common ground that the change must be a material change of circumstances. …
[92] I find that Galo’s retirement and resulting reduction of income is a material change in circumstances and that spousal support should be terminated. My reasons follow.
The Retirement is a Material Change
[93] Shirley agrees that a payor’s retirement can be a material change. However, she argues that on the facts of this case, Galo’s retirement is not a material change for several reasons:
- The retirement was voluntary.
- Galo is able to continue working but he chose to retire because he can afford to stop working.
- He chose to retire to avoid paying spousal support.
- There is no evidence that his medical problems required him to retire.
- The Separation Agreement did not identify retirement as a material change.
- The Sharpe order did not set a termination date for spousal support.
- Galo has the ability to continue paying spousal support.
[94] The Separation Agreement provides that spousal support can be varied if there is a material change in circumstances. Retirement has been recognized to be a material change in circumstances. While the Separation Agreement does not define retirement as a material change in circumstances, this does not preclude such a finding. On the facts of this case, Galo’s retirement was a material change in circumstances.
[95] There is no hard and fast rule as to when a voluntary retirement will constitute a material change in circumstances. As is often the case, it depends on the facts. This was a voluntary retirement in the sense that Galo was not fired. However, his circumstances justified his decision to retire.
[96] I do not accept that Galo retired to avoid paying spousal support. While Galo’s decision to retire was voluntary, in his mind it was an “obvious” and reasonable decision given his outdated skills, health and age. I agree. Galo did not choose to retire early (before 65). He was almost 68 years old. He gave Shirley advance warning of his retirement and has fairly continued to pay spousal support pending the outcome of his motion.
[97] It was agreed in para 16.3 of the Separation Agreement that obligations arising out of remarriage are to be taken into account when determining if there has been a material change in circumstances. Galo remarried and has two dependent children. He did not seek to vary spousal support while he was working, because of his dependent children. Arguably he could have done so given para. 16.3 of the Separation Agreement. He has made a reasonable decision to retire and his income is reduced. Galo’s obligation to his dependent children, on a reduced income, is yet another factor that supports the finding that his retirement and resulting drop in income, constitute a material change in circumstances.
[98] Shirley relies on the fact that the Sharpe order and the Separation Agreement do not set a date for termination of spousal support. This does not mean that spousal support cannot be terminated. The Separation Agreement allows for spousal support to be varied and the burden rests on the party seeking the variation to prove the material change in circumstances. Galo has satisfied this burden.
[99] As required by s. 17(4.1) of the Divorce Act, I am satisfied that “a change in the condition, means, needs or other circumstances of [Galo] has occurred since the making of the [Sharpe] order”.
Termination of Spousal Support
[100] I have decided to terminate spousal support effective April 30, 2019. This decision recognizes and addresses what a variation order should do as set out in s. 17(7) of the Divorce Act. My reasons follow.
[101] Shirley’s positions vary. In her motion she takes the position that Galo is hiding money with this wife and should keep working, with no end date for spousal support. She asked the court to increase monthly spousal support to $3,999. This is based on her argument that he has an income of at least $140,000. As explained above, this is based on speculation and I have rejected this argument.
[102] Alternatively, Shirley seeks an increase in monthly spousal support to $1,916. This assumes that he can supplement his retirement income by working in some capacity and generate a total income from all sources of $86,792. During the hearing of the motions, Shirley said that she only expected Galo to work for another 2-3 years.
[103] Shirley provided Spousal Support Advisory Guideline calculations (“SSGA”) to support her position that spousal support should continue. The SSAG are not helpful because they assume an income for Galo that is unrealistic and has not been proven. Further, the SSAG do not take into account the provisions in the Separation Agreement.
[104] I have already decided that Galo’s decision to retire was justified and reasonable. His decision and my decision to terminate spousal support is consistent with the parties' agreement in para. 20.1 of the Separation Agreement that states:
20.1 Further the parties agree that the support and property division of this agreement are inextricably intertwined and constitute and full and final financial settlement. More particularly, the husband and the wife acknowledge that he and she may be called upon during the rest of their lives to use, either wholly or in part, their capital for his or her own support and they agree to do so without recourse to the other.
[105] As shown in the above chart, the net worth of the parties is very similar. Their investment and retirement income is similar. There is no economic hardship that must be relieved. With the equalization that occurred in 2001, Shirley has accumulated the assets that she has today.
[106] There are no economic advantages, disadvantages or financial consequences of the marriage that would require the continuation of spousal support. Shirley has no dependents, whereas Galo has two dependent children. While Shirley chooses to pay for the expenses of her grandchildren and son, she has no obligation to do so. She has the ability to earn rental income if she chooses to do so. Rental income could replace in whole or part the spousal support she will no longer receive.
[107] In 2019, Galo will be 69 years old and Shirley will be 76 years old. The parties agreed that they “may be called upon during the rest of their lives to use, either wholly or in part, their capital for his or her own support and they agree to do so without recourse to the other.” This agreement is significant because the parties envisioned a time when they would have to rely on their capital. The time has come for them to honour and follow their agreement.
[108] Galo asks that spousal support be terminated retroactive to May 31, 2018. I have chosen to terminate spousal support as of April 30, 2019. On January 10, 2018, Galo told Shirley that he was retiring. By choosing April 30, 2019 as the termination date, Shirley will have had more than a year to plan for the termination of spousal support. In my view, this is fair to both of the parties.
Conclusion
[109] I make the following orders:
(1) Paragraph 1 in the order of Justice Sharpe dated June 11, 2004 is varied. The monthly payment of spousal support in the amount of $1,400 shall terminate effective April 30, 2019.
(2) Effective April 30, 2019, the Applicant’s obligation to maintain life insurance as security for spousal support, pursuant to the Separation Agreement May 8, 2002, is terminated.
(3) The Respondent’s notice of motion dated January 21, 2019 is dismissed.
(4) If the parties cannot agree on the costs of the motions, they shall agree to a schedule for the exchange of brief written cost submissions and file the submissions with the Court by April 22, 2019.
C. Horkins J.
Released: March 5, 2019
COURT FILE NO.: FS-18-2851 DATE: 20190305 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Galo Angulo, Applicant – and – Shirley Reva Angulo, Respondent
REASONS FOR JUDGMENT C. Horkins J.
Released: March 5, 2019