COURT FILE NO.: FS-18-67-00
DATE: 2019 10 29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Grant Dillman
Applicant
- and -
Elizabeth Dillman
Respondent
P. Smith for the Applicant husband
E. Cohen for the Respondent wife
HEARD: May 23, 2019
REASONS FOR JUDGMENT
D.E HARRIS J.
[1] The issue to be determined pursuant to this application is what spousal support, if any, the applicant Mr. Dillman, should pay to the respondent, Ms. Dillman. There is also an uncontested application for divorce made by Mr. Dillman.
Background
[2] In 2010, after 33 years of marriage, during which time they raised two children and led successful careers, the Dillmans decided to separate.
[3] A brief history of the family is necessary. When the couple’s daughter was born in 1979, Elizabeth took a 17 week maternity leave and then went back to work with reduced hours. In 1981, when their son was born, Elizabeth again took 17 weeks maternity before returning to employment. The couple hired daycare help and housekeepers so that they could both work outside the home.
[4] In 1991, Grant was offered a good, well-paying job at Bruce Power. The job required the couple to relocate to Bruce County. Shortly afterwards, in 1993, Ms. Dillman was hired as a receptionist at Bruce Telcom. Eventually, she rose to manager of the customer care department, one of the most senior positions in the company. She was in charge of a staff of 24 employees.
[5] When the couple decided to separate in 2010, Mr. Dillman’s income was $190,393 at Bruce Power. Ms. Dillman’s income at Bruce Telecom was $87,304.
[6] Shortly afterwards, in 2011, Ms. Dillman was terminated from her employment with one-year severance pay at her full salary. She had been offered the alternative of part-time work but had declined the offer.
[7] On January 18, 2013, the parties with the assistance of the same counsel who argued this application, negotiated a final separation agreement. Under the separation agreement Ms. Dillman, received, retroactive to August 1, 2012, $6000 per month. The $6000 monthly payment was based on an imputation to Elizabeth of $30,000 per year and Grant’s actual 2011 income of $187,507. The agreement states that Mr. Dillman’s support obligation would be reviewable if there is a material change of circumstances. Until the time of a new agreement or court order, the obligation was to remain. It is also noted that upon review, the agreement will not be taken to establish a precedent.
[8] The agreement was never filed with the court. Grant Dillman was paying this amount of spousal support until, at age 63 in July of 2018, he retired from Bruce Power. Contrary to the agreement, Mr. Dillman abruptly and unilaterally ceased to pay the $6000. Mr. Dillman was offered contract positions subsequent to his retirement but declined He has agreed to pay Elizabeth $450 per month without prejudice until a date in 2020.
[9] Mr. Dillman, now 64 years old, brings this application to terminate his spousal support obligation, while Ms. Dillman, 61 years old, requests ongoing spousal support.
[10] This is an originating application, not an application for a variation. As noted, the separation agreement was neither filed with a court nor was it turned into a court order.
Summary Judgment
[11] Both parties agree that the support question can be determined by summary judgment. I agree. The primary facts are not in dispute, and there are no credibility issues. In accord with Rule 20.04(2) of the Rules of Civil Procedure R.R.O. 1990. Reg. 194., there is no genuine issue requiring a trial: Hryniak v. Mauldin 2014 SCC 7. There is no need to exercise any of the extra fact-finding powers provided for in Rule 20 (2.1).
Legislative Provisions
[12] The Divorce Act provision for spousal support is found in Section 15.2. The factors and objectives are set out in subsections (4) and (6):
15.2(4) Factors
In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including
(a) the length of time the spouses cohabited;
(b) the functions performed by each spouse during cohabitation; and
(c) any order, agreement or arrangement relating to support of either spouse.
15.2(6) Objectives of spousal support order
An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should
(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(b) apportion between the 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 spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
Economic Advantages and Disadvantages from the Marriage and its Breakdown
[13] In order to share the economic consequences of the marriage and its breakdown, it must be recognized that Ms. Dillman made significant contributions to the Dillman family. She agreed to move to Bruce County so Mr. Dillman could pursue the job at Bruce Power. She gave birth to the couple’s two children, took maternity leaves after their birth, and worked reduced hours outside the home maximize her time with the children. These were economic sacrifices for the benefit of Mr. Dillman and the family unit.
[14] It is true that Ms. Dillman was very successful in the work force, climbing her way up from the bottom position at Bruce Telecom to one of the highest rungs of the corporate ladder. It might be said that her success was not hampered by the sacrifices she made. However, this would tend to ignore the major familial contributions she made to the marriage. As counsel for Ms. Dillman put it, she put his career ahead of hers. She, as is the case in a traditional marriage, was in charge of domestic duties and raising the couple’s two children.
[15] A marriage of this length—33 years—creates strong interdependence between the spouses. Ms. Dillman’s shouldering of the domestic responsibilities freed up Mr. Dillman to earn income for the family. She had some secondary economic role and most if not all of the domestic role. This strengthens Ms. Dillman’s claim, given Mr. Dillman’s position as the primary breadwinner, for compensatory relief.
Relief of Economic Hardship Arising from Marriage Breakdown
[16] Ms. Dillman claims needs-based support as well. She argues that she relied upon Mr. Dillman’s income during the marriage and after separation as she had lost her employment and was unable to replace it with a similar income. She found a series of jobs but they came no where near what she had been earning at Bruce Telecom. She could have taken other jobs and done more to look for work. For those reasons, it is agreed that $30,000--$32,000 ought to be attributed to her.
[17] Mr. Dillman points out that Ms. Dillman has done well with her investments. They were worth as of last year, almost a half-a-million dollars. As part of the matrimonial property settlement, she owns the matrimonial home free and clear of any mortgages. Nonetheless, there is a need component in this spousal support application.
Self-sufficiency is an Important Objective
[18] Ms. Dillman has been unsuccessful in becoming self-sufficient. She has made some efforts in that regard but has not been able to obtain a job that will enable her to replace her former income at Bruce Telecom. This, given her present age of 61, is unfortunately not surprising.
[19] The objective in the Act is to promote in so far as possible, self-sufficiency. It is accepted that this can be an impossible task in some situations, particularly with a marriage of this duration.
[20] Ms. Dillman has some financial wherewithal represented by her savings and she owns her own home. But the financial imbalance in the marriage persists. It would be unfair in the circumstances she finds herself in after 33 years to demand self-sufficiency and to penalize her in this regard.
Of What Importance is the Separation Agreement?
[21] Under subsection 15.2(4)(iii), a contractual arrangement like a separation agreement is one factor on the issue of what spousal support ought to be paid. An agreement of this nature, and the intention of the parties underlying it, should not be lightly interfered with: Miglin v. Miglin 2003 SCC 24, [2003] 1 S.C.R. 303 at paras. 60, 87, L.M.P. v. L.S., 2011 SCC 64, [2011] 3 S.C.R. 775 at para. 14. Of course, the parties cannot by contractual agreement supersede the jurisdiction of the court in spousal support matters: Moge v Moge 1992 CanLII 25 (SCC), [1992] 3 S.C.R. 813, 99 D.L.R. (4th) 456 at para. 24.
[22] There is no suggestion that the conditions under which the agreement was negotiated were in any way unsatisfactory or that the substance of the agreement was anything other than fair and equitable: Miglin v. Miglin at paras. 80-86,
[23] The separation agreement paid Ms. Dillman substantial support over an indefinite period. At the time, Mr. Dillman was still employed and being paid almost $190,000 per year. The parties were 58 and 55 years old respectively.
[24] The agreement was silent on the issue of retirement despite that “normal” retirement at age 65 for Mr. Dillman was only slightly more than 7 years away.
[25] A significant part of the argument on this application was focussed on whether there has been a material change of circumstances due to Mr. Dillman retirement at age 63 years of age. However, it is not imperative that a material change of circumstance be shown in order to deviate from the spousal support agreement. As mentioned above, the agreement was never converted into a court order.
[26] A material change of circumstance justifying interference and alteration of the parties original intent as recorded in the separation agreement generally ought not to be a result of a purely volitional choice: Hooper v. Hooper 2002 CanLII 44963 (ON CA), 2002 CarswellOnt 1821, 213 D.L.R. (4th) 548, 59 O.R. (3d) 787 (C.A.) at para. 29 (Carswell), also see Gajdzik v. Gajdzik 2008 CarswellBC 233, 2008 BCSC 160 at para. 47. Otherwise, Mr. Dillman could have retired soon after the agreement was signed and, pointing to his reduced income, claimed a change of circumstances.
[27] In fact, Mr. Dillman retired early, at age 63. The normal expectation is age 65. Of course, this is not a hard and fast rule. Mr. Dillman argues, and there is no refutation from Ms. Dillman, that there was an understanding at the time of the separation agreement that Mr. Dillman was going to retire early, at age 61.
[28] Furthermore, Mr. Dillman’s pension during the equalization negotiations was valued, at Ms. Dillman’s insistence, at age 61. Therefore, it is argued, it was reasonable for Mr. Dillman to retire at 63 and he should be entitled to terminate spousal support.
[29] There is no evidence and it has not been suggested that Mr. Dillman retired in order to deprive his wife of spousal support. I would not impute income to him on this basis. On the other hand, it is also clear that Mr. Dillman decided to retire only because he had been working hard for many years and wanted to take leisure time with his new partner. His health is fine and there were no other reasons compelling him to retire. Mr. Dillman refused the offer of contract work.
[30] The silence in the agreement with respect to retirement is telling. Retirement was inevitable in the not too distant future barring some unforeseeable circumstance. With retirement would come a precipitous drop in Mr. Dillman’s income. For whatever reason, he was content not to address the issue in the agreement. The silence in the separation agreement and its support of $6000 a month, tends to bolster Ms. Dillman’s request for continuing spousal support.
[31] While there may have been an understanding that retirement could be as early as age 61, this did not find its way into the agreement. Perhaps in the give and take during the separation agreement negotiations, Ms. Dillman was able to avoid the inclusion of this expectation. But that is speculative. The fact is, it was not reduced to writing in the contractual resolution between the parties. That is important.
[32] Mr. Dillman relies on Craig v. Craig, [2003] O.J. No. 5392 (S.C.) at paras. 9,12 and Gemmell v. Gemmell, 47 R.F.L. (4th) 149, [1999] O.J. No. 1268 (S.C.) at paras. 38-39. Neither case deals with a situation like the one at hand in which the negotiated separation agreement was silent with respect to retirement. That is a vital distinction.
[33] Ms. Dillman relies on Hickey v. Princ, 2015 ONSC 5596, 127 O.R. (3d) 356 to support her position that Mr. Dillman’s voluntary retirement does not constitute a material change of circumstances. I agree with her argument. In Hickey v. Princ, the former husband retired at age 51 and there was an equalization payment of his pension based on that age. However, the minutes of settlement did not include a provision permitting a variation to spousal support in the case of retirement at age 51.
[34] The Divisional Court put great emphasis on this fact,
54 If it was foreseen that the Respondent would retire at age 51, and the parties did not put any provision in the Minutes of Settlement giving the Respondent the right to vary spousal support when that occurred, that does not necessarily mean that it was not "taken into account". One could instead infer that the absence of an automatic review at the foreseen retirement age of 51 meant that the parties intended spousal support to continue at the prescribed amount thereafter.
[35] The Divisional Court approved of the case of Bullock v. Bullock which raised a similar voluntary retirement issue as the case at hand:
72 In Bullock v. Bullock, 2004 CanLII 16949 (ON SC), [2004] O.J. No. 909 (S.C.J.), Corbett J. dealt with a situation where the payor had retired voluntarily at age 62, but was still able to work and earn an income. Corbett J. made the following observations, at paras. 9 and 10:
Many people dream of retiring "early", although there is not a set age at which people today expect to cease working. Many successful people find that they can afford to stop work before they reach the age of 65. Others continue on well into their seventies and even longer. The legal question for this case, then, is not whether Ronald should retire at age 62, but whether this personal choice should be viewed as a "material change of circumstances" for the purposes of payment of spousal support.
In my view it should not.
73 He went on to distinguish Boston, and concluded as follows:
There is no suggestion in Boston that the payor spouse had chosen to retire early. There was no argument that the payor spouse had continued earning capacity and that income ought to be imputed to him. In my view, voluntary retirement at age 62 is not a basis for finding a material change in circumstances. A support payor cannot choose to be voluntarily underemployed, whether by retirement or otherwise, and thereby avoid his or her spousal support payment obligations: Moffat v. Moffatt (2003), 2003 CanLII 64301 (ON SC), 67 O.R. (3d) 239, per G.A. Campbell J.; Ridley v. Ridley, [2000] S.J. No. 606, 2000 CarswellSask 598 (at paras. 13-15), per McIntyre J.; Martel v. Martel (2000), 2000 SKQB 227, 6 R.F.L. (5th) 342, 193 Sask. R. 225, [2000] 7 W.W.R. 632, per McIntyre J. (at para. 31); Dumalski v. Dumalski, [1999] S.J. No. 435, 1999 CarswellSask 422 (at paras. 20 and 21), per Gunn J.
[36] Also see Bater v. Bater, 2018 ONSC 1489, 289 A.C.W.S. (3d) 777 at paras. 49, 61-64.
[37] In the end, the situation is parallel to Francis v. Logan, 2008 BCSC 1028, 57 R.F.L. (6th) 352 (B.C.S.C. [In Chambers]), where a 63-year-old man retired, thereby drastically reducing his income. It was said,
[34] With the greatest of respect, the decision to take early retirement was not, in this case, dictated by medical needs, or economic exigencies but rather personal preferences and choices.
[35] This decision was also taken in the face of a permanent spousal support …
[36] In my view, in the circumstances of this case, the defendant's voluntary early retirement was not a material change of circumstances. This conclusion flows from the fact that it was not the result of a reduced ability to earn income or medical uncertainty but rather personal preferences and decisions.
[38] It should be added that Mr. Dillman’s decision to unilaterally breach the separation agreement by ceasing the support payments is not something which endears him in this proceeding. The agreement is explicit that the obligation remained until altered by negotiation or a court order. The termination of the payments constituted a breach of contract.
[39] In conclusion, Mr. Dillman’s voluntary retirement does not trigger a material change of circumstances of a kind which would substantially diminish the weight of the original separation agreement. The intention of the parties manifest in the agreement is a major factor in determining spousal support.
DOUBLE-DIPPING
[40] The concern about double-dipping is that a former spouse may reap an unfair windfall if they receive both the benefit of equalization and spousal support payments. Justice Major said in the leading case of Boston v. Boston, 2001 SCC 43, [2001] 2 S.C.R. 413,
63 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…
64 To avoid double recovery, the court should, where practicable, focus on that portion of the payor's income and assets that have not been part of the equalization or division of matrimonial assets when the payee spouse's continuing need for support is shown …
[41] In view of the conclusion that Mr. Dillman’s retirement does not constitute a material change of circumstances and should not end his support obligations, double-dipping is not a major impediment to the continuation of support payments. In Boston Justice Major said at para. 65:
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. Double recovery may also be permitted in spousal support orders/agreements based mainly on need as opposed to compensation, which is not the case in this appeal.
[42] In the same vein, the Divisional Court in Hickey said,
64 In our view, the "means" of the Respondent to pay support is not restricted to his pension income, since he is fully capable of earning income from some other source, and is of an age where it is reasonable for him to continue earning employment income.
[43] Mr. Dillman was capable of continuing to earn income at Bruce Power but chose not to do so in favour of retiring at age 63. In these circumstances, continuing support in accordance with the separation agreement is not double recovery which should be prohibited. All the evidence points to the spousal support having a substantial need component and although that has diminished since support has been paid, it is still an important factor. Past equalization does not alter this fact. There continues to be economic hardship as fallout from the breakdown of this 33-year marriage.
CONCLUSION
[44] Looking at the three conceptual bases for support—compensatory, contractual and non-compensatory—and taking into account the statutory factors in the context of the objectives codified in the Divorce Act (Brackow v. Brackow, 1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420, 169 D.L.R. (4th) 577 at paras. 15, 35-36) the matter of the most salient importance is the separation agreement. It crystalizes the parties’ intention at the time of separation. The subsequent voluntary retirement of Mr. Dillman at age 63 is not a circumstance that should be permitted to undercut his negotiated spousal support obligations.
[45] This was a marriage of 33 years and the support obligations should, subject to other considerations, be commensurate with its lengthy duration. This appears to be the intention of the parties when they negotiated the spousal agreement.
[46] In my view, a fair result is to order the continuation of the spousal payments continuing indefinitely to satisfy the compensatory and need based justifications for spousal support.
[47] In calculating support due after Mr. Dillman attains 65 years of age, the Spousal Support Advisory Guidelines (SSAG) calculated by each party are very close to each other. The low point for Mr. Dillman is $4700 per month and the high point is $6300. However, the SSAG are not all that helpful as it is an average over three years and throughout most of that three-year time period, Mr. Dillman was drawing his Bruce Power salary.
[48] Mr. Dillman’s annual income is now $95,000 and he lives with a common law partner who contributes to living expenses. The two own an investment property together worth $280,000.
[49] Ms. Dillman has reinvested much of her spousal support payments and her investment portfolio has tripled since the time of the separation agreement. It is now at close to half a million dollars. Her assets are just over a million dollars, almost twice as high as Mr. Dillman’s.
[50] Ms. Dillman’s income is $65,000 but her living expenses exceed her income. Her OMERS pension will pay her well in excess of $20,000 per year when she decides to start drawing on it.
[51] Ms. Dillman asks for spousal support of $2,300 per month. I think that is excessive given the parties respective financial positions. Retroactive to when Mr. Dillman ceased spousal support payments on August 1, 2018, spousal support will be $1200 per month. Any payments made since August 1, 2018 will be deducted from this amount. Life insurance premiums for Elizabeth will be continued by Mr. Dillman.
[52] The uncontested divorce requested is granted. The Dillmans have not lived together for almost nine years.
[53] If the parties cannot agree on costs, written submissions of a maximum of two pages each can be emailed within two weeks of the release of these reasons.
D.E HARRIS J.
Released: October 29, 2019
COURT FILE NO.: FS-18-67-00
DATE: 2019 10 29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GRANT DILLMAN
Applicant
- and –
ELIZABETH DILLMAN
Respondent
REASONS FOR JUDGMENT
D.E HARRIS J.
Released: October 29, 2019