Court File and Parties

COURT FILE NO.: FS-99-FA-8355-1

DATE: 20191025

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ESTER ROKACH Applicant

– and –

AMIRAM ROKACH Respondent

COUNSEL:

Terrence Reid, lawyer for the Applicant

Laurie Pawlitza, lawyer for the Respondent

HEARD: October 15, 2019

ENDORSEMENT

DIAMOND J.:

Overview

[1] In 1991, the parties separated after over 21 years of marriage. They have now been divorced for approximately 26 years, and the respondent has paid spousal support to the applicant for over 28 years. Over the last 14 years, the respondent has paid spousal support to the applicant pursuant to the terms of the final order dated July 7, 2005 of Justice Wilson (“the Wilson Order”).

[2] At the time of separation, both parties were 43 years of age. They are now both nearly 72 years old. The applicant retired in 2015 when she was 68 years old. It is the respondent’s intention to retire at the end of 2019 at the age of 72.

[3] Both parties agree that there has been a catastrophic change of circumstances (as that term is defined in the Wilson Order) entitling the respondent to seek an order varying and/or terminating his obligation to pay spousal support. His motion seeks to do just that, namely end his obligation to pay spousal support pursuant to the Wilson Order (albeit to be implemented through a “step down” approach). Of note, the respondent originally asked for an order declaring the applicant to be a vexatious litigant, but that relief was not pursued at the hearing.

[4] The applicant resists the relief sought by the respondent, and brings her own cross-motion seeking an order increasing the spousal support payable by the respondent to $2,000.00 per month, to be secured through a $100,000.00 life insurance policy.

[5] Both motions were argued before me on October 15, 2019. At the conclusion of the hearing I took my decision under reserve.

The Smith Judgment

[6] This proceeding has a lengthy and extensive history. There is no dispute that early in the marriage, the applicant worked on a part-time basis so that the respondent could attend university on a full-time basis. The respondent ultimately became an accredited professor.

[7] Litigation ensued after the parties’ separation in 1991, and all issues in that litigation were originally settled by way of the consent Judgment dated November 2, 1994 of Justice Smith (“the Smith Judgment”).

[8] In terms of equalization, the Smith Judgment was relatively straightforward. The parties agreed that the respondent would maintain his OPSEU pension and the applicant would keep the matrimonial home. There is no dispute that the respondent’s OPSEU pension was equalized.

[9] With respect to spousal support, the respondent was to pay the applicant support at a rate of 50% of his income up to $77,500.00, and 1/3 of any income above that amount. Paragraph 10 of the Smith Judgment addresses the “lifetime” aspect of spousal support by providing that in the event the applicant did not obtain full-time employment by September 1997, the respondent would be entitled to move to vary the spousal support payments in the event of a catastrophic change in circumstances not voluntarily caused by him. The Smith Judgment precluded the applicant from bringing any variation proceedings whatsoever to the spousal support provisions, although nothing precluded her from commencing enforcement proceedings if necessary.

Further Litigation by the Applicant

[10] In mid-February 1999, the applicant commenced a default hearing claiming nearly $20,000.00 in alleged arrears owed by the respondent. That hearing was dismissed by the order dated September 22, 1999 of Justice Jones.

[11] Less than one month later, the applicant commenced a further application claiming support arrears of approximately $40,000.00 and requesting that the respondent be imprisoned for non-payment. That application was converted into a trial of an issue, with the trial scheduled to last three days. The applicant was self-represented at the time, and on the fourteenth day of trial she withdrew the application and agreed that the respondent had in fact overpaid spousal support to her. Justice Paisley ordered the applicant to pay the respondent’s costs, which were subsequently assessed in the amount of $106,369.82. Justice Paisley further found that the respondent had overpaid spousal support in the amount of $21,240.00.

[12] Less than one year after Justice Paisley’s order, the applicant brought a motion seeking an order varying Justice Paisley’s judgment and requesting the Family Responsibility Office (“FRO”) to enforce certain alleged breaches of the Smith Judgment. During the lifespan of that motion, the relief against FRO was dismissed (with costs reserved to the trial judge) and a trial of the issues of alleged support arrears, together with the respondent’s claim to a set-off based upon Justice Paisley’s costs order and support overpayment was set to proceed.

The Wilson Order

[13] All of the outstanding issues (which arose through the above litigation) were ultimately resolved by way of the Wilson Order. Paragraphs 21-22 of the Wilson Order explicitly provided that, apart from the property provisions of the Smith Judgment, all prior court orders and judgments (and in particular the Smith Judgment) were set aside in their entirety and replaced by the Wilson Order which would supersede all prior orders and judgments.

[14] The key provisions of the Wilson Order relating to spousal support are as follows:

(a) the respondent was to pay the applicant spousal support equivalent to 33.3% of the respondent’s line 150 annual income in his tax return filed with Canada Revenue Agency;

(b) spousal support payments were to exclude any gifts or inheritances not reflected in the respondent’s income tax return;

(c) the applicant was to receive 33.3% of any net tax benefit received by the respondent from any early retirement package or “golden handshake” not reflected in his line 150 income;

(d) the respondent was to maintain a life insurance policy with a face amount of $100,000.00 designating the applicant as beneficiary as security for the spousal support payments; and

(e) FRO was not to be involved in the collection of any spousal support, and the parties were to exchange income tax returns and supporting financial documents on an annual basis.

[15] Paragraph 25 of the Wilson Order provided that the terms therein could not be varied by either party except in the event of a catastrophic change of circumstances. As previously stated, the parties have agreed that this threshold has been met, and the only issue(s) to be determined on these motions is whether spousal support should be terminated, or increased.

The Parties’ Income

(a) The Respondent

[16] In 2008, the respondent retired from his full-time position at the Ontario Correctional Institute, as he was eligible for his full OPSEU pension at that time. He did continue to teach on a contract basis, maintaining a small private practice. According to the respondent, he included his retirement allowance in his 2008 line 150 income and the applicant was paid her corresponding portion pursuant to the Wilson Order calculations.

[17] In 2009, the respondent moved to Israel. Admittedly, the respondent’s income for the purpose of calculating spousal support became problematic due to the requirement that he declare the totality of all worldwide income on his Israeli income tax return. In any event, while living in Israel the respondent has earned income from various sources: (a) his small private practice, (b) teaching at the Israeli Center for Academic Studies (a private university), (c) teaching an online course at a university in the United States, and (d) teaching, on occasion, a summer course at York University.

[18] The respondent’s accountant has assessed the respondent’s income had it been earned in Canada, and the respondent gave evidence that he has provided the applicant with 33.3% of his annual income from all sources in accordance with the Wilson Order.

[19] In or around July 2018, the applicant took issue with the calculations proffered by the respondent’s Israeli accountant. The applicant contends that the methodology set out in the Wilson Order amounts to an imperfect formula for calculating the respondent’s spousal support obligations. The applicant points to the respondent paying property taxes for a Toronto property from June 2017 until May 2018 at which time one of the parties’ sons assumed responsibility for payment of those property taxes. I note that title to the Toronto property was never in the respondent’s name, as the Toronto property was originally purchased in 1998 by the respondent’s then romantic partner, then purchased by his parents and subsequently transferred into the parties’ son’s name in 2018.

[20] In February 2019, the applicant brought an emergency motion which resulted in the respondent paying to the applicant, on an interim and without prejudice basis, $1,500.00 a month retroactive to July 1, 2018. While the applicant maintains that the respondent is hiding income (presumably on a worldwide basis), as stated it is the respondent’s intention to retire by the end of 2019.

[21] The respondent testified that in 2015 he suffered a second heart attack which resulted in having three stents inserted into his coronary artery. As such, he has multiple risk factors for a further heart attack, and is being treated for high blood pressure. According to the advice of his cardiologist, the respondent is not supposed to work more than one day per week.

[22] For the balance of 2019, the respondent estimates his total net income to be $46,846.00. Upon retirement, the respondent will be receiving his OPSEU pension ($36,041.04 annually) and CPP (approximately $12,000.00 annually).

[23] Apart from his pension and vehicle, he has no other significant assets.

(b) The Applicant

[24] As stated, the applicant retired in 2015 when she was 68 years old. In addition to child support, she has been receiving CPP, Old Age Security and Guarantee Income Supplements on an annual basis in the total amount of approximately $20,000.00. Her most recent sworn financial statement discloses that she receives social assistance of $7,800.00 per year but no source for this social assistance has been disclosed.

[25] According to the applicant’s 2015-2018 income tax returns, she has not included the spousal support received from the respondent as income.

[26] The matrimonial home has remained in the applicant’s name since the Smith Judgment. According to a recent bank appraisal, the home is worth approximately $1,200,000.00. An $850,000.00 “blanket mortgage” was registered on title on December 15, 2015, and the amount currently advanced to the applicant under that blanket mortgage is $285,000.00. The respondent points out that it is unclear as to how the applicant would have qualified for an $850,000.00 blanket mortgage given her position as to her current income.

[27] The applicant’s financial statement further discloses that she has a net worth of approximately $880,000.00. It is the respondent’s position that the applicant ought to either rely upon the equity in her home to supplement her current retirement income, or sell the home for downsizing purposes. The applicant has refused to sell her home, maintaining that the financial, physical and social tolls upon her would not yield an equitable result.

[28] According to the respondent, if the applicant did sell her home and invest the net equity at a 5% return, it would produce additional income of $42,500.00 per year. The respondent argues that this potential income, coupled with the respondent’s current annual income, would allow her to reside in an apartment or condominium unit going forward.

[29] The respondent seeks an increase in the respondent’s ongoing spousal support obligation to $2,000.00 per month, claiming that the respondent continues to hide income from additional sources. The respondent argues that, separate and apart from his request to terminate spousal support, the relief sought by the applicant would require him to earn Canadian employment income of $72,000.00 per year which is simply not the case, or even possible.

[30] Finally, the current $100,000.00 insurance policy maintained by the respondent is set to continue until 2027 and automatically expires when the respondent reaches the age of eighty. When he does turn eighty, assuming he qualifies for insurance, the premiums would increase to $1,149.00 per month and it is his position that he simply could not afford to pay that amount.

Variation of Spousal Support

[31] Section 17(7) of the Divorce Act, R.S.C. 1985, C. 3 provides that when the Court is asked to vary (or terminate) spousal support, the following considerations should be taken into account:

(a) any economic advantages or disadvantages to the former spouse arising from the marriage or its breakdown;

(b) any financial consequences to be apportioned between the former spouses arising from the care of any child of the marriage over and above any obligation for the support of such child;

(c) any economic hardship of the former spouses arising from the breakdown of the marriage; and

(d) insofar as practicable, the promotion of the economic self-sufficiency of each former spouse within a reasonable period of time.

[32] While I intend to take all of those principles into account, I note that none of the individual considerations set out in section 17(7) should be given priority over the other when determining the (continued) right to spousal support. As held by the Supreme Court of Canada in Moge v. Moge 1992 CanLII 25 (SCC), the ultimate goal of spousal support is to alleviate a disadvantage to a spouse’s economic losses as completely as possible taking into account all of the circumstances of the parties, including the advantages conferred on the other spouse during the marriage.

[33] The parties were married for over 20 years, and as such there is no automatic spousal support time limit established by the Spousal Support Advisory Guidelines. That said, and as held by the Court of Appeal for Ontario in Choquette v. Choquette 2019 ONCA 306, whether spousal support is characterized as compensatory or not, the obligation to pay spousal support is not one made in perpetuity unless explicitly agreed to by the parties or ordered by the Court. There is nothing in the Wilson Order requiring the respondent to pay the applicant spousal support for the duration of her life.

Decision

[34] To begin, in my view, the spousal support obligations set out in the Wilson Order are compensatory in nature as they act to redress the imbalance caused by the applicant’s original economical disadvantages and losses.

[35] Both parties filed numerous authorities dealing with requests to vary or terminate an order for spousal support. There are common themes and considerations running through many of these decisions. I shall address these common themes and how they apply to the facts in this proceeding.

How long did child care responsibilities continue after separation?

[36] The parties’ youngest child remained in the applicant’s care for approximately 10 years after their separation. As such, no child has been in the applicant’s care for the last 18 years.

How long has spousal support been paid?

[37] As stated, the respondent has paid spousal support for over 28 years after the conclusion of a 21 year marriage. I agree with the respondent that, as a general proposition, the longer that spousal support is paid, the more likely it is that the payee spouse’s compensatory claim has been satisfied.

[38] In my colleague Justice Horkins’ recent decision of Angulo v. Angulo 2019 ONSC 1456, the parties were married for 28 years and spousal support was ordered terminated after been paid for nearly 17 years. In Angulo, the husband’s decision to retire amounted to a material change of circumstances. Justice Horkins found that the parties’ net worth, investment and retirement income were similar, and as there was no economic hardship to be relieved, the husband’s obligation to pay spousal support was terminated.

Are the respondent’s reasons for seeking termination of support “reasonable and justified”?

[39] As the husband is nearly 72 years of age, and the applicant retired at 68 years of age, it cannot lie on the applicant’s mouth to objectively criticize the respondent’s decision, especially given his current state of health. There is evidence in the record that the husband’s current sources of income are modest at best, and decreasing in any event.

[40] The parties have already agreed that the respondent’s retirement amounts to a catastrophic change in circumstances. In my view, his current circumstances residing in Israel justify his decision to retire. After paying support for 28 years, I do not believe the respondent chose to retire with a view to avoiding his spousal support obligations. As such, in my view the respondent’s decision is both reasonable and justified.

Has the applicant received additional benefits over and above spousal support?

[41] There is no dispute that the applicant’s home has increased in value approximately five folds since separation, with current equity totaling approximately $850,000.00. It appears that the applicant has also received the additional benefit of not paying income tax on the spousal support she received from the respondent as she has failed to declare that spousal support as income for at least the last five years.

Is the applicant obliged to use her assets to generate income?

[42] The respondent relies on the Supreme Court of Canada’s decision Boston v. Boston 2001 SCC 43, and in particular the following passages (my emphasis in bold):

“When a pension is dealt with by the lump-sum method, the pension-holding spouse (here the husband) must transfer real assets to the payee spouse (here the wife) in order to equalize matrimonial property. The wife can use these real assets immediately. Under a compensatory spousal support order or agreement, the wife has an obligation to use these assets in an income-producing way. She need not dedicate the equalization assets to investment immediately on receiving them; however, she must use them to generate income when the pension-holding spouse retires. The ideal would be if the payee spouse generated sufficient income or savings from her capital assets to equal the payor spouse’s pension income. In any event, the payee spouse must use the assets received on equalization to create a “pension” to provide for her future support.

However, where the payee spouse receives assets on equalization in exchange for a part of her former spouse’s pension entitlement, she must use those assets in a reasonable attempt to generate income at least by the time the pension starts to pay out. The reason for this requirement is clear. The payee spouse cannot save the assets that she receives upon equalization and choose instead to live on the liquidation of the payor spouse’s pension when he retires. If she were permitted to do so, the payee spouse would accumulate an estate while the payor spouse’s estate is liquidating.

The obligation of the payee spouse to generate investment income from the assets that she received on equalization is not an onerous one. It is not predicated upon insensitive standards on how the payee spouse should have managed her finances from the point of separation. Nor does it require investment-savvy decisions, premised upon an extensive knowledge of the marketplace. The obligation on the payee spouse to generate income from her assets would be satisfied by investing in a capital depleting income fund which would provide a regular annual income.”

[43] The applicant has remained in the matrimonial home since separation. As stated, she was able to secure an $850,000.00 credit mortgage with, according to her sworn financial statement, minimal to no income. The applicant relies on the decision of Justice Corbett in Bullock v. Bullock 2004 CanLII 16949 (ONSC) in support of her position that a payor of spousal support ought to make retirement plans on the basis that spousal support will continue until aggregate retirement savings can be expected to keep both former spouses at reasonable standards of living. In my view, the facts in Bullock are clearly distinguishable from this case. To begin, the husband in Bullock unilaterally withdrew from the workforce at 62, and such a retirement did not amount to a material change in circumstances (something which is conceded in the within case). As well, the husband was found to have the capacity to earn “more than enough income to warrant continuation of support in accordance with the domestic contract and the consent judgment.”

[44] The applicant’s position is that her current financial situation will soon result in her being unable to carry the costs of maintaining and owning her home in the absence of ongoing spousal support. She has been a part of her community for the last 37 years, and selling her sole asset would not improve her financial situation. Leaving aside the fact that there is no cogent evidence before me to support such a contention other than the applicant’s self-serving statements, there is little to no explanation as to why she chose not to use her post-separation assets (i.e. the home) to create the “pension” to provide for her future support. The applicant contends that the support she has received from the respondent has been inadequate and left her in a vulnerable position resulting in her current financial situation. The problem with this position is two-fold: (a) the applicant has advanced this position on several occasions in various motions and applications, all of which were either withdrawn by her or dismissed by the Court, and (b) as a result of and arguably in reliance upon those unsuccessful motions and applications, the applicant chose to consent to the Wilson Order setting out the respondent’s spousal support obligations.

Should the respondent be ordered to “double dip” into his pension income?

[45] The applicant is arguing that notwithstanding that 42% of the respondent’s pension was already equalized in the Smith Judgment, the respondent should look to his pension to continue to fund the payment of spousal support to the applicant. I reject this position.

[46] In Boston, the Supreme Court of Canada held that it would be generally unfair to allow a payee spouse to reap the benefit of a pension both as an equalized asset and then again as a source of income, especially when the payee spouse receives capital assets which she can then retain to grow her own estate.

[47] Double dipping is permissible on rare occasions, namely, when (a) the payor spouse has the ability to pay, (b) the payee spouse has made a reasonable effort to use the equalized assets in an income producing way, and (c) despite the foregoing, an economic hardship from the breakup of the marriage still persists. In my view, none of these conditions exist in the case before me. Given the respondent’s pending retirement, he no longer has the ability to fund spousal support payments. As set out previously, there is no evidence that the applicant has used her home in a reasonable, income producing way. Any economic hardship alleged to exist on the part of the applicant is unsubstantiated and based upon statements which, frankly, raise more question than they answer.

[48] The applicant further argues that the principles in Boston can be distinguished as the respondent’s pension was allegedly used for both equalization and support purposes in the Smith Judgment. In my view, this is a distinction without a difference.

The economic circumstances of the parties

[49] I have already set out the parties’ respective financial circumstances earlier in this Endorsement. At the time of the Smith Judgment, the applicant received the matrimonial home with a $15,000.00 mortgage, and the husband retained his OPSEU pension which he started receiving in 2008 on his retirement from the Ontario Correctional Institute.

[50] The respondent resides in Israel with his common law partner of 10 years, and contributes approximately $500.00 on a monthly basis to the home owned by his common law partner.

[51] As previously stated, the applicant has not produced any documents to substantiate her claim that she receives social assistance. I agree with the respondent that the applicant’s financial statement and supporting documentation do not adequately explain how she meets her monthly expenses. The $285,000.00 mortgage has not increased for some time. The home has a basement suite which the applicant has not rented for several years.

[52] The respondent has looked to his OPSEU pension as one of the main sources funding payment of spousal support to the applicant since 2008. Once he retires at the end of this year, he will essentially have his pension income and CPP. In my view, given that the respondent’s sole post-retirement asset will be his pension, I do not find the presence of any economic hardship that would warrant a continuation of spousal support. Neither party has any dependents. The applicant is at liberty to draw upon the equity in, or sell, her home with a view to investing and/or living off those proceeds. She chooses not to, but her choice should not amount to an anchor dragging the respondent further downward.

[53] Simply put, I agree with the respondent that the time has come to terminate his spousal support obligations. However, in my view the respondent’s offer to carry out a step-down termination, thereby “titrating” the applicant off her spousal support payments, is appropriate. To that end, I make the following order:

(a) There are no spousal support arrears owing by the respondent to the applicant as of October 31, 2019;

(b) Commencing November 1, 2019, the respondent shall pay the applicant fixed and non-variable monthly spousal support as follows:

i. for November and December 2019, the sum of $1,500.00 on the first of each of those two months;

ii. from January to December 2020, the sum of $750.00 on the first of each of those months; and,

iii. effective December 2, 2020, spousal support shall be forever terminated.

(c) The respondent shall deliver post-dated cheques to the applicant’s counsel by no later than October 30, 2019 in accordance with the “step down” payment schedule set out above;

(d) The parties may not move to seek any further variance of the above terms, even in the presence of a further catastrophic change of circumstances, without leave of the Court;

(e) Paragraphs 1, 8-20 and 25-27 of the Wilson Order are deleted and replaced by the terms of this Endorsement;

(f) The parties shall execute a Notice of Withdrawal from Enforcement by FRO and shall deliver it to FRO. The parties shall not involve FRO in the collection of any spousal support payment set out above unless there is a default in the cashing of any cheque;

(g) For the 2018 and 2019 income tax years, the applicant shall include and the respondent shall deduct on their respective tax returns the spousal support of $1,500.00 per month, and refile their income tax returns, if necessary, within 30 days and provide proof that they have done so to the other party through counsel;

(h) For the 2020 income tax years, the applicant shall include and the respondent shall deduct on their respective tax returns the spousal support of $750.00 per month.

(i) The security for the respondent’s spousal support shall be reduced to $10,000.00, and the obligation to maintain that coverage shall end on December 2, 2020. The respondent may continue to hold his current life insurance policy in the amount of $100,000.00 (or such life other insurance policy as he may choose) with only $10,000.00 to be designated to the applicant as beneficiary as security for spousal support, and the balance of $90,000.00 being designated as the respondent chooses;

(j) In the event of any future proceedings of any kind, including a motion seeking leave as ordered above, the respondent shall be given 45 days’ notice of any such proceedings; and

(k) In the event the applicant sells her home, any proceeds of sale shall be held in trust by counsel acting on the sale until the issue of the costs of these motions are determined.

[54] The respondent’s motion to change is granted in accordance with the above terms. The applicant’s cross-motion is dismissed.

Costs

[55] I would urge the parties to try and resolve the issue of costs of these motions. If those efforts prove unsuccessful, they may exchange written costs submissions totaling nor more than five pages (including a Costs Outline) in accordance with the following schedule:

(a) The respondent shall serve and file his costs submissions within 14 days of the date of the release of this Endorsement; and

(b) The applicant shall serve and file her responding costs submissions with 14 days of the receipt of the applicant’s costs submissions.

Diamond J.

Released: October 25, 2019

COURT FILE NO.: FS-99-FA-8355-1

DATE: 20191025

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ESTER ROKACH Applicant

– and –

AMIRAM ROKACH Respondent

ENDORSEMENT

Diamond J.

Released: October 25, 2019