COURT FILE NO.: FC-12-1906-2
DATE: 2020/04/30
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Thomas Charles Charlton, Applicant
AND
Louise Christine Coburn, Respondent
BEFORE: Justice Engelking
COUNSEL: Gil Rumstein, Counsel for the Applicant
Yvette Virok, Counsel for the Respondent
HEARD: January 30, 2020
ENDORSEMENT
[1] This is a Motion to Change brought by the Applicant, Mr. Charlton, seeking an order terminating his spousal support obligation to Respondent, Ms. Coburn, providing for a reimbursement of an overpayment of support, terminating the requirement to maintain life insurance and dismissing Ms. Coburn’s claim for a retroactive increase in support.
[2] In her Response to Motion to Change, Ms. Coburn makes a claim for an order dismissing Mr. Charlton’s motion, retroactive increases to her support for 2018, and the continuation of ongoing support, including on an imputed income to Mr. Charlton.
[3] The issues to be determined by this court are:
Is there a material change in circumstances such that spousal support should be subject to review?
If so, should there be a retroactive award varying spousal support for 2018?
If so, what is the appropriate quantum of support for 2019?
Should there be a termination of support effective January 1, 2020?
If not, what is the appropriate quantum of on-going support?
[4] For the reasons that follow, I find that there is a material change in circumstances such that support should be reviewed, there shall be no change to the spousal support payable for 2018, a reduction of support for 2019 to $3,547 per month based on Mr. Charlton’s income of $143,979 (employment, CPP retirement benefit and investment income) and support shall not be terminated as of January 1, 2020, but payable on an imputed employment income of $40,000 to Mr. Charlton.
Background Facts
[5] The parties began cohabiting in or about 1993, married on December 10, 1996 and separated on January 27, 2011. There are no children of the relationship. They are not divorced.
[6] A final order was made on consent of the parties by Justice Beaudoin dated May 22, 2014 based on the terms of a separation agreement entered into by the parties. The terms of the order provided for spousal support to Ms. Coburn of $3,817 per month based on a mid-range of the Spousal Support Advisory Guidelines (“SSAG”) on a three-year average of Mr. Charlton’s post-separation income for the three years preceding the order. The order provided, additionally, that a $20,000 change in Mr. Charlton’s income would constitute a material change in circumstance for the purposes of a motion to vary. The order also provided for Mr. Charlton to maintain a life insurance policy of $200,000 to secure his spousal support obligation.
[7] In 2016, Ms. Coburn filed a Motion to Change on the basis that Mr. Charlton’s income had increased beyond the $20,000 provided for in the Final Order of Justice Beaudoin. She was successful in having her support increased by Final Order of Justice MacLeod dated October 21, 2016 to $4,317 per month, being a figure between the low and mid-range of the SSAG based on an income for Mr. Charlton of $182,092. In his endorsement, Justice MacLeod concluded for reasons contained therein that he could not proceed under the Divorce Act.[^1] He also “concluded that the spousal support is primarily needs based rather than compensatory in nature.”[^2]
[8] On January 10, 2019, Mr. Charlton was involuntary terminated from his employment at Ligado Networks. He has been unable to obtain new employment.
[9] Mr. Charlton’s income since the date of the last order has been as follows:
• 2016 – $194,356.29;
• 2017 – $200,699;
• 2018 – $207,241; and,
• 2019 – $133,100.13.
[10] Mr. Charlton’s 2019 income is comprised of employment income, bonuses, severance pay, and vacation pay. It is his position that his severance pay ran out as of August 1, 2019.
Issue #1 – Has there been a material change of circumstances meriting a review of spousal support?
[11] I do not propose to spend much time on this issue. Rather, I rely on the Endorsement of Mr. Justice MacLeod for analysis of it. Justice MacLeod set out in paragraph 12 of his endorsement the following:
a) The parties agreed that “should the applicant’s income change by $20,000 or more, this shall be considered a material change of circumstances”. They also prescribed other events that “may be” a material change in circumstances, including a change in “either party’s financial position.” Finally they agreed that a material change could be considered “even if it was foreseen or foreseeable”
b) The parties were to exchange their Notices of Assessment each year, upon request, by June 1 of each year.
[12] At paragraph 28 of his endorsement, Justice MacLeod stated: “I find that the applicant’s income has increased by $20,000 and, therefore, pursuant to the terms of the order there has been a material change. This opens spousal support for review.”
[13] I adopt Justice MacLeod’s reasoning and I too find that based firstly on Mr. Charlton’s increase of income by more than $20,000 in 2018, and secondly, his decrease in income by more than $20,000 in 2019, there have been a material changes in circumstances pursuant to the terms of the original order. Additionally, I find that Mr. Charlton’s loss of employment, resulting in a “change in [his] financial position” constitutes a material change.
Issue #2 – Should there be a retroactive variation of support for 2018?
[14] It is Ms. Coburn position that as Mr. Charlton’s income increased by more than $20,000 in 2018, from $182,092 at the time of Justice MacLeod’s order to $207,100, effective January 1, 2018, her monthly support should increase from $4,317 per month to $5,393 per month, representing the mid-range of the SSAG calculation on a 19-year relationship. Her further position, which I will address later in this endorsement, is that Mr. Charlton’s on-going support obligation should remain at $5,393 per month based on an income to be imputed to him in keeping with his 2018 income.
[15] Mr. Charlton’s position is that monthly support for 2018 should be reduced to $3,200 per month, though it is difficult to comprehend on what he bases that position. Ms. Coburn’s Financial Statement dated December 12, 2019 indicates that she has monthly expenses of $4,370. It may be Mr. Charlton’s view that between his monthly support of $4,317 and Ms. Coburn’s pension income (CPP and OAS) of $1,041, she has more than is required to meet her needs. That, however, is not the question as it relates to a variation of support for 2018. The quantum of monthly support payable by Mr. Charlton contained in the final order of Justice MacLeod is deemed to be the correct one. The only question for 2018, therefore, is whether Mr. Charlton’s increase in income by more than $20,000 should result in a corresponding increase in spousal support.
[16] Mr. Justice MacLeod also thoroughly canvassed the issue of an appropriate variation in the face of an increase in the support payor’s ability to pay, particularly in a disability case, such as this one. In 2016, as now, Ms. Coburn took the position that support should increase in accordance with a mid-range SSAG calculation based on the totality of Mr. Charlton’s increased income on a 18.83 (now 19) year relationship. Justice MacLeod found that there were several reasons that this approach was inappropriate: “Firstly the SSAG is not binding although must be considered. Secondly, disability cases may be exceptions to the SSAG in any event. Thirdly, this is a variation.”[^3] Ms. Coburn’s approach remains equally inappropriate now.
[17] Although Ms. Coburn does attempt to make some argument as to there being a compensatory basis to her support entitlement, it is clear to me that this is a needs-based case due to disability. Ms. Coburn has been unable to work since she was diagnosed with Multiple Sclerosis in 2004. She has been a dependent of Mr. Charlton since that time and remains so today. As I have indicated above, moreover, Justice MacLeod found (while at the same time acknowledging that these compartments are not watertight[^4]) that Ms. Coburn’s entitlement to spousal support “is primarily needs based rather than compensatory in nature”. I do not intend to go behind that finding.
[18] Mr. Charlton argues that Ms. Coburn’s needs are attended to at the existing quantum of support. Indeed, he argues it should be lessoned for 2018. Her monthly income surpasses her monthly revenue, and she has been able to increase her assets by contributing to her RRSP’s, including by $18,000 in 2018. Mr. Charlton submits that Ms. Coburn’s retirement assets have grown from $261,000 in 2016 to $340,000 in 2018. He submits that because this is both a needs-based case and because it falls within the disability exception to the SSAG, there should be no automatic increase in support for 2018 just because there was (at that time) an increased ability to pay. There was, in other words, no “commensurate increase in the real need of the support recipient” referred to by Justice MacLeod[^5].
[19] Rather than an increase in support being automatic in a needs-based claim where there has been a post-separation increase in ability to pay, the court is required to undertake an examination of the criteria of s. 33(7) of the Family Law Act (“FLA”) of recognizing each spouse’s contribution to the relationship, the economic consequences of the relationship, making fair provision to assist a spouse to contribute to his or her own support and relieving financial hardship on a request for variation[^6]. In 2016, Justice MacLeod found that the increase in Mr. Charlton’s income at that time was “precisely the kind of increase in income the parties anticipated the applicant might receive”, and that it was not unreasonable for the support to be increased as well.[^7] While this remains as true for 2018 as it was for 2016, in 2016 Ms. Coburn’s expenses were slightly greater than was her income.
[20] Ms. Coburn has not provided any evidence to demonstrate that her need is greater now (or was greater in 2018) than it was in 2016, though, again, there may be a slight difference in the cost of living over that period. Nevertheless, this is not a situation where Ms. Coburn’s needs were not being met. On that basis and considering the factors contained in s. 33(7) of the FLA, I decline to order a retroactive increase in spousal support of 2018.
Issue #3 – What is the appropriate quantum of support for 2019?
[21] Mr. Charlton seeks a reduction in his monthly support for 2019 commensurate with his reduced income for that year. In his Motion to Change, Mr. Charlton, in fact, seeks a termination of support effective August 1, 2019, the date by which he alleges that his severance pay was used up. However, in his Factum and submissions on the motion, Mr. Charlton is seeking the aforementioned reduction to his 2019 support payable and a termination of support as of January 1, 2020. Ms. Coburn seeks to have income imputed to Mr. Charlton, both for 2019 and on-going, to reflect his 2018 income.
[22] Section 19 of the Ontario Child Support Guidelines, o. Reg. 391\97, as am. [“Guidelines”] provides that the court may impute such amount of income to a spouse as it considers appropriate in the circumstances, including where it appears income has been diverted or a spouse has failed to provide income information when under a legal obligation to do so.
[23] In Smith v. Smith (2012), [2012 CarswellOnt 3113] Justice Chappel outlined the relevant factors for determining whether to impute income as follows:
(a) The onus is on the party seeking to impute income to establish an evidentiary basis upon which to establish that the other party is intentionally unemployed or underemployed;
(b) It is not necessary to establish bad faith or an attempt to thwart support obligations before imputing income. A payor is intentionally underemployed if they earn less than they are capable of earning having regard for all of the circumstances. In determining whether to impute income on this basis, the court must consider what is reasonable in the circumstances. The factors that the court should consider include the age, education, skills and health of the party, the party’s past earning history and the amount of income the party could reasonably earn if they had worked to capacity;
(c) There is a duty on the part of the payor to actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their dependents;
(d) The court will not excuse a party from their support obligations or reduce these obligations where the party has persisted in un-remunerative employment, or where they have pursued unrealistic or unproductive career aspirations. A self -induced reduction of income is not a basis upon which to avoid or reduce support payments;
(e) If a party chooses to pursue self-employment, the court will examine whether this choice was a reasonable one in all of the circumstances and may impute an income if it determines that the decision was not appropriate having regard for the parties support obligations;
(f) Where a party fails to provide full financial disclosure relating to their income, the court is entitled to draw an adverse inference and to impute income to them; and,
(g) The amount of income that the court imputes to a party is a matter of discretion. The only limitation on the discretion of the court in this regard is that there must be some basis in the evidence for the amount that the court has chosen to impute.” (See Meissner v. Meissner, 2013 ONSC 5621, paragraph 37).
[24] The onus is on Ms. Coburn to establish that the court should impute income to Mr. Charlton by demonstrating that Mr. Charlton is earning less than he is capable of earning.
[25] Mr. Charlton’s evidence is that he was involuntarily terminated from his employment at Ligado Networks on January 10, 2019. He contends that his job there was a “specialty job” working with antiquated Northern Telecom equipment. Once Ligado modernized its equipment, his skillset was no longer useful to any other prospective employer. Additionally, Mr. Charlton contends that given his age of 63, he is no longer employable for the salary he enjoyed with Ligado.
[26] Subsequent to his layoff from Ligado Networks, Mr. Charlton applied for seven Telecom specialist positions at the mid to senior level, and two low-income positions between March and December of 2019. He also posted his resume on LinkedIn, Workopolis, Monster and an Excel research firm; he has automatic searches set up within those sites, and he regularly checks them to see if any jobs for which he is qualified appear.
[27] Ms. Coburn’s view is that Mr. Charlton’s efforts to obtain employment, particularly employment at the level he was accustomed to having, are minimal, and that he is consequently voluntarily underemployed. However, as Chappel J. noted in Smith, the court needs to consider a number of factors to determine if that is the case. Mr. Charlton is 63 years of age. He does not have any post-secondary degree or certificate, and his skill set does not include software programming. He is not bilingual, and he has severe hearing loss, which entails wearing two hearing aids. He has nerve damage in his right shoulder and left hand and cannot lift heavy objects. Sadly, Mr. Charlton’s days of earning a six-figure salary may very well be behind him. His capacity to do that with Ligado Networks, moreover, was predicated on his knowledge of the antiquated systems with which the company worked until very recently. It is not difficult to imagine, even where an opportunity may present itself, that there are much younger people with much more up-to-date education and certification who can readily fill such positions.
[28] It is not unreasonable, in my view, that Mr. Charlton is unable to find employment commensurate with that which he recently lost. It may not even be unreasonable that he is unable to find employment. Under these circumstances, I do not find that employment income should be imputed to Mr. Charlton for 2019 beyond the figure he actually received of $133,100.
Issue #4 – Should there be a termination of spousal support as of January 1, 2020?
[29] Based on his involuntary dismissal from Ligado Networks, and his inability to subsequently find employment, Mr. Charlton seeks an order terminating support effective January 1, 2020. However, these parties agreed in 2014 that the payment of spousal support by Mr. Charlton to Ms. Coburn would be indefinite, and that it would terminate upon the death of either party. I am not prepared to find that it should be terminated as of January 1, 2020, nor that it should be reduced to only $1.00 per month.
[30] By his own evidence, Mr. Charlton has applied for only two jobs which are not in the technology field, one as a pharmacy clerk and one as a security guard. While Mr. Charlton referred to these as “low-income jobs”, I was provided with no evidence as to their respective salaries. I think it is safe to say that they would be somewhat higher than a minimum wage salary of approximately $29,500. Mr. Charlton has a support obligation, one that the parties agreed would persist until death, and there is a duty on him to fulfill his obligation to Ms. Coburn. For these reasons, I am prepared to exercise my discretion and impute an income to him of $40,000 for 2020 and beyond.
[31] I decline to grant an order automatically terminating spousal support as of the date that Mr. Charlton reaches age 65, as he has requested. According to his meetings with his financial planner, Mr. Charlton may well have an income post age 65 which will be greater than that which I am imputing to him currently, and Ms. Coburn may equally well be entitled to continue to be supported at that time.
[32] Mr. Charlton’s motion to change is granted, in part, to reflect that commencing January 1, 2019, he shall pay spousal support on his actual employment income of $133,100. A DivorceMate calculation provided by Mr. Charlton which includes his CPP retirement and investment income demonstrates that this would result in a mid-range monthly payment of $3,547 to Ms. Coburn for 2019.
[33] Commencing January 1, 2020, Mr. Charlton shall pay spousal support on an imputed annual employment income of $40,000. The parties are to produce a DivorceMate calculation setting out the SSAG mid-range quantum on that income, along with his other income as noted above.
[34] The amount of insurance required to secure Mr. Charlton’s on-going support obligations may be adjusted accordingly.
[35] Mr. Charlton’s request for an order terminating of spousal support of January 1, 2020 is dismissed.
[36] Ms. Coburn’s cross-motion for a retroactive increase to spousal support for 2018 is dismissed.
Costs
[37] Once the above calculations have been completed, the parties may file a consent draft order with me through the Trial Coordinator’s office for my review and execution. If the parties are unable to agree on the contents of the order, an appearance with me can be arranged by teleconference through the Trial Coordinator.
[38] If the parties are thereafter unable to reach an agreement as to the liability or quantum of costs payable, they may make written submissions of no more than three pages, along with copies of their bills of costs and offers to settle, to me at intervals of 10 days from May 29, 2020, and I will make an order.
Justice Engelking
Date: April 30, 2020
COURT FILE NO.: FC-12-1906-2
DATE: 2020/04/30
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Thomas Charles Charlton, Applicant
AND
Louise Christine Coburn, Respondent
BEFORE: Justice Engelking
COUNSEL: Gil Rumstein, Counsel for the Applicant
Yvette Virok, Counsel for the Respondent
ENDORSEMENT
Engelking J.
Released: April 30, 2020
[^1] Endorsement of Justice MacLeod dated October 21, 2016, paragraph 4
[^2] Ibid., paragraph 6
[^3] Ibid., paragraph 31
[^4] Ibid., paragraph 38
[^5] Ibid., paragraph 36
[^6] Ibid., paragraph 38
[^7] Ibid., paragraph 40