COURT FILE NO.: FS-08-7271-02
DATE: 20200921
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Rose DiStefano
Applicant
– and –
Joe DiStefano
Respondent
Francesco Provenzano, for the Applicant
Warren S. Fullerton, for the Respondent
HEARD: September 18, 2020
ENDORSEMENT
THIS MOTION HAVING BEEN HEARD BY ZOOM PURSUANT TO THE PROTOCOL IN PLACE DURING SUSPENSION OF NORMAL COURT OPERATIONS DUE TO THE COVID-19 OUTBREAK.
BONDY J.
A. INTRODUCTION
1) Background
[1] This was an urgent motion regarding the issue of suspension of ongoing spousal support, pending the hearing of a motion to terminate support.
[2] The applicant, Rose DiStefano (“Ms. DiStefano”), was born January 19, 1967 and, accordingly, is now 53 years of age. The respondent, Joe DiStefano (“Mr. DiStefano”), was born February 5, 1963 and, accordingly, is currently 57 years of age. They were married on May 31, 1986, separated on July 23, 2006, and divorced on January 18, 2010. Accordingly, they cohabited for 20 years, Ms. DiStefano was 39 years of age at the date of separation, and Mr. DiStefano was 43 years of age. The parties have three adult children who are all independent.
[3] The parties resolved the issues between them by way of minutes of settlement. The terms of those minutes of settlement were incorporated into a divorce order made on January 10, 2010 by Quinn J. Paragraph six of that order provides that Mr. DiStefano shall make periodic payments of spousal support in the amount of $953 per month commencing November 1, 2009. Paragraph seven provides that the respondent shall make payments of spousal support in the amount of $1,600 per month once his obligation to pay child support is terminated. Spousal support is specifically acknowledged to be subject to variation in the event of a material change in circumstances.
[4] As said above, the children are all independent and have been since 2014. As a result, Mr. DiStefano has paid $1,600 a month in spousal support since 2014. Said another way, there have been no increases in spousal support in the ten years that followed Quinn J’s order. As is more fully considered below, Mr. DiStefano did not provide annual income information until he brought this motion. That is notwithstanding significant increases in his income throughout that timeframe.
[5] During the relevant timeframe, Mr. DiStefano was employed by Fiat Chrysler automobiles (“FCA”). Fiat Chrysler eliminated a shift due to a decreasing demand for the product built at the Windsor plant. As a result, 1,500 jobs were to be eliminated. Retirement incentive packages were offered to senior employees. Mr. DiStefano accepted such a package, and he retired on July 10, 2020 after 38 years of service with that company.
[6] He now seeks to terminate spousal support.
B. ANALYSIS
1) Urgency
[7] As a triage judge, I found this matter urgent on July 24, 2020, in particular, because it involves potentially dire issues regarding the parties’ financial circumstances. Nothing has changed, and so I found it appropriate to proceed with the motion on the basis of urgency.
2) Equalization of the Parties’ Assets on Separation
[8] The major asset received by Ms. DiStefano on equalization was the matrimonial home. At the time, it was valued at about $110,000. The major asset taken by Mr. DiStefano was his pension. It was valued at about $149,217 for the purposes of equalization.
[9] The actuary who prepared the pension valuation for purposes of negotiation of the separation agreement used four different assumptions as to age. The age assumptions and corresponding value of the pension attributable to the marriage were as follows:
Retirement at age 65- $51,820;
Retirement at age 60- $111,997;
Retirement at age 57.4- $149,217;
Retirement at age 49.8- $320,027.
[10] Said another way, by relying upon an assumption of retirement at age 57.4 years, Ms. DiStefano received significantly more value on equalization then she would have based upon an assumption of 60 or 65 years of age.
3) Ms. DiStefano’s current means
a) Current assets and liabilities
[11] Ms. DiStefano deposed that she has the following assets:
i. 2008 Dodge Nitro automobile- $1,500;
ii. Home- $156,000 (Mr. DiStefano values the home much higher);
iii. Usual household contents- no value; and
iv. Savings- $6,104.
[12] Ms. DiStefano deposed that she has the following liabilities:
i. Line of credit- $43,000; and
ii. Credit card- $9,000.
b) Current income
[13] Ms. DiStefano deposes that she stayed home during the marriage to raise their three children. On separation, she worked on an as-needed basis as a cashier at the Giovanni Caboto Club. Ms. DiStefano says that she does not work more than ten hours per week as recommended by her physicians.
[14] Dr. Khan, who is Ms. DiStefano’s psychiatrist, confirms a diagnosis of persistent depressive disorder, major depressive disorder, and panic disorder. Dr. Khan also advises that her pharmaceutical treatment consists of four separate drugs, and that she is treatment compliant. Ms. DiStefano attends Dr. Khan’s clinic every four-six weeks. Dr. Khan suggests that Ms. DiStefano should work only six-ten hours per week due to her diagnosis.
[15] Dr. Taboun is Ms. DiStefano’s family physician. She also opines that Ms. DiStefano is incapable of working any more than five-ten hours per week.
[16] In summary, if the conclusions reached by these two physicians are correct, Ms. DiStefano may not be able to work more than five-ten hours per week. I, however, make the following observations in that regard.
[17] The first is that these are conclusions from treating physicians who may not be objective. The second is that Dr. Taboun’s note does not even include a diagnosis. The third is that the court will need to know about Ms. DiStefano’s health at the date of separation, and whether she should have been doing more to become financially independent at that time period. If this matter proceeds to court, proper medical reports from the time frame beginning with separation and ending at the date of trial will be required. As a result of the frailty of the evidentiary record before me, I am not in a position to reach any conclusion whatsoever on the likelihood of success of this argument at trial.
[18] Ms. DiStefano is not currently working because of Covid-19.
[19] Last year Ms. DiStefano earned approximately $252 per month or $3,024 from employment.
[20] There was no evidence to suggest that Ms. DiStefano has a partner or anyone else who assists her financially. That said, Ms. DiStefano’s 28-year-old daughter continues to live with her.
[21] Although not disclosed in her financial statement, Ms. DiStefano’s lawyer disclosed at the hearing that her client had been receiving a $2,000 per month CERB benefit between March and August 2020 for a total of $12,000.
4) Ms. DiStefano’s current needs
[22] According to Ms. DiStefano’s financial statement, she has monthly expenses of $2,707 per month and income of $1,919.74. I calculate that as a result, she experiences a shortfall of approximately $800 each month. Presuming she is able to demonstrate at trial that she is unable to work more than five-ten hours per week, she will have no choice but to continue to remortgage her home or sell her home in order to make ends meet.
5) Mr. DiStefano’s current financial situation
a) Current assets and liabilities
[23] Mr. DiStefano deposes that he has the following:
i. A $50,000 retirement allowance that he plans to roll into an RRSP;
ii. A one half interest in a home valued at $225,000 less a mortgage of $61,000 for a total net one half interest of $82,000;
iii. A 2017 Chrysler Pacifica vehicle, which he does not believe has a net value because there is $25,000 owing on it;
iv. Household contents - no value; and
v. Current savings of $5,970.
[24] In addition to the assets claimed by Mr. DiStefano, Ms. DiStefano deposed that he has also received, or will receive, a $20,000 new vehicle voucher.
[25] Mr. DiStefano deposed that he has the following liabilities:
i. Mortgage in the amount of $61,000;
ii. Line of credit, $4,500;
iii. Car loan $25,000; and
iv. Braces for his child $6,700.
b) Current income
[26] Mr. DiStefano is not currently employed. He deposed that he has no intention of returning to work. He reasons that he began work at the age of 18 and worked until age 57 for a total of 38 years.
[27] Approximately 47% of Mr. DiStefano’s pension was not equalized. His post-retirement pension income will be about $3,385.71 per month or $40,628.52 annually of which $19,095.00 is attributable to the un-equalized portion of his pension.
[28] Mr. DiStefano’s current spouse has historically not worked regularly since the birth of their now ten-year-old daughter. She has, however, just accepted work to clean a couple of neighbours’ homes. Mr. DiStefano anticipates that her work will result in a few hundred dollars a month in income.
6) Mr. DiStefano’s current needs
[29] Mr. DiStefano has remarried and as said above has a ten-year-old daughter from that marriage. According to his financial statement, Mr. DiStefano has current monthly expenses of $7,648.12. That is, however, based on income related source deductions. As a result, I expect that his post-retirement monthly expenses will be approximately $6,000 less the $1,600 per month attributed to spousal support or $4,400. I reiterate Mr. DiStefano’s post-retirement income will be approximately $3,385.71 per month of which $1,591.25 is an unequalized pension. The result will be a shortfall of approximately $1,000 per month or $12,000 a year.
[30] Finally, Mr. DiStefano has yet to receive his $50,000 retirement allowance. That will no doubt put significant financial pressure on him in the immediate future.
7) The support paid and the support that Ms. DiStefano maintains ought to have been paid
[31] Mr. DiStefano deposed that he has paid spousal support since separation or for about 14 years. He calculates that the total paid exceeds $250,000. Ms. DiStefano calculates that he has paid a total of $155,191 in spousal support.
[32] I reiterate that the order of Quinn J. provides for a variation in spousal support in the event of a material change in circumstances. Ms. DiStefano deposed that there has been a material change in circumstances related to Mr. DiStefano’s income. but he has never provided her with his notices of assessment. As a result, the spousal support order has not kept pace with Mr. DiStefano’s income.
[33] Ms. DiStefano calculates that based upon the income information now in her possession, Mr. DiStefano paid the following monthly spousal support and ought to have paid the following monthly midrange spousal, in the following years:
Year
Income
Support paid
Support payable
Annual Shortfall
Annual Shortfall
2017
$100,120
$1,600
$2699
$1,099
$13,188
2018
$93,786
$1,600
$2441
$844
$10,128
2019
$107,478
$1,600
$2892
$1,292
$15,504
Total
N/A
N/A
N/A
N/A
$38,820
[34] I make the following observations with respect to Ms. DiStefano’s potential claim for a retroactive increase in spousal support, and the consideration of Mr. DiStefano’s blameworthy conduct in the context of his request to terminate spousal support.
[35] The first is that any such increase in spousal support would ultimately be a matter of the discretion of the court: see Thompson v. Thompson, 2013 ONSC 5500, at para. 103.
[36] The second is that incomplete or misleading financial disclosure is a consideration governing an award of spousal support: see Bremer v Bremer, 2005 CanLII 3938 (ON CA), [2005] O.J. No. 608, 13 R.F.L. (6th) 89; Kerr v. Baranow, 2011 SCC 10, [2011] S.C.R. 269, at paras. 207, 212; and D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231, at paras. 106, 124.
[37] That is true in this case because the separation agreement signed by the parties and crystallized in the divorce order anticipated a variation in support for a material change in circumstances. I conclude that as a result, each had an opportunity to inform the other of any material change in circumstances which was uniquely within their knowledge. Consistent with that observation, notwithstanding the lack of a clause requiring the annual exchange of income information, I conclude that each had an obligation to inform the other of any change in income that amounted to a material change in circumstances, where that change was uniquely within their knowledge. It appears that was the case with Mr. DiStefano’s income.
[38] That obligation may, however, have been somewhat blunted in the circumstances of this case. I say that because Ms. DiStefano had to know that Mr. DiStefano’s income was increasing. As was observed by respondent’s counsel, Ms. DiStefano did not seek either an increase in spousal support or disclosure throughout the relevant timeframe. Further, Ms. DiStefano did not advise Mr. DiStefano of any changes in her income. That said, on the record before me it appears that any changes in Ms. DiStefano’s income throughout the relevant timeframe were not material.
8) Discussion
a) Introduction
[39] In order for there to be a temporary change in support, the moving party must address four issues:
Is there a good prima facie case for a variation of support?
Would continuation of support result in a hardship to the payor?
Is the matter sufficiently urgent to vary support on a temporary basis? and
Does the moving party come to court with clean hands?
Raaflaub v Gonosch, 2020 ONSC 1578, at para. 7.
b) Is there a good prima facie case for a variation of support?
[40] When read in isolation, Mr. DiStefano’s materials make a good prima facie case for a variation of spousal support.
[41] I say that because the current financial situation of both parties is less than optimal. Neither is capable of meeting all of their respective basic necessary expenses.
[42] As said above, the valuation of Mr. DiStefano’s pension was based on retirement at 57.4 years of age. That is almost exactly the age when he retired. Ms. DiStefano received the benefit of any increased equalization payment as a result of that valuation. Further, the possibility of Mr. DiStefano retiring at that age may not have come as a big surprise given that the parties chose to value the pension based upon retirement at that age.
[43] Further, the parties cohabited for approximately 20 years. I reiterate, Ms. DiStefano was about 39 years old at the date of separation. Accordingly, the spousal support guidelines suggest a spousal support duration of between 10 and 20 years. The parties are now at slightly below midrange duration.
[44] Mr. DiStefano maintains that Ms. DiStefano ought to have been working since separation with a view to becoming financially independent. I agree that she had such an obligation.
[45] However, correspondence from Ms. DiStefano’s treating physicians suggest that she may not have been able to work more than she did. While that evidence is yet to be court tested, it raises an issue as to whether the fundamental marital obligation may require a continuation of spousal support beyond what may normally be appropriate because of Ms. DiStefano’s illnesses and resulting potential inability to meet her financial needs: see Bracklow v. Bracklow, 1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420, at para. 49. This issue will need to be addressed at trial.
c) Would continuation of support result in a hardship to the payor?
[46] I begin with the observation that it would be unfair to consider a hardship to the payor in a vacuum. It seems to me that it must be considered in the context of any hardship to the recipient that may result from granting the payor’s request.
[47] Again, when read in isolation, Mr. DiStefano’s materials support the conclusion that continuation of support would result in hardship to him.
[48] I reiterate Mr. DiStefano’s post-retirement income will be approximately $3,385.71 per month of which $1591.25 is an unequalized pension. I reiterate that I estimate that his post-retirement monthly expenses will be approximately $6,000. In other words, according to Mr. DiStefano’s materials, he will be significantly relying upon savings each month in order to meet expenses. That is because of his stated intention to not return to the workforce at all.
[49] There is, however, good reason to doubt Mr. DiStefano’s stated intention of not returning to work.
[50] Given that Mr. DiStefano claims only $55,970 in savings, including his retirement allowance, given that he is only 57 years of age, and given that he has a ten-year-old daughter who may want to attend postsecondary education, I question the sustainability of Mr. DiStefano’s household budget, if he does not return to work. As said above, the assumptions provided by Mr. DiStefano result in a shortfall of approximately $1,000 per month or $12,000 a year. Assuming an inflation rate of 0%, and assuming there are no major expenses for things, such as new vehicles, a new furnace etc., that would result in a shortfall of $120,000 by the time his daughter is 20 years of age. That exceeds the stated total value of all Mr. DiStefano’s property disclosed in his financial statement by about $11,000. That is with the $20,000 new automobile voucher added back into his assets listed in his financial statement. In other words, it creates an impossible scenario for Mr. DiStefano.
d) Is the matter sufficiently urgent to vary support on a temporary basis?
[51] Again, on the basis of Mr. DiStefano’s materials, I find the matter sufficiently urgent to vary support on a temporary basis. That is because of the significant shortfall in Mr. DiStefano’s stated inability to meet his monthly expenses, which was discussed immediately above. However, as said above, that stated intention requires further scrutiny given the apparent unsustainability of the situation he describes.
[52] I also reiterate that Mr. DiStefano claims approximately $55,970 in savings while Ms. DiStefano claims only $6,104 in savings. Further, Ms. DiStefano’s claimed savings are more than offset by her outstanding credit card balance of approximately $9,000. In other words, she is in a negative current financial position.
[53] Said another way, Ms. DiStefano would be far less able to weather an abrupt halt in spousal support than Mr. DiStefano would be able to continue making those payments, pending judicial determination of the issue of termination of spousal support.
[54] Prior to leaving this issue, I am aware that Ms. DiStefano received approximately $12,000 in CERB payments this year. The last of those payments was received in August which is the same month that her financial statement was completed in. Although that evidence was not tested, I presume that $12,000 is reflected in the financial position represented in that financial statement.
e) Does the moving party come to court with clean hands?
[55] The normal retirement age is 65 years of age. The law is well settled that a spouse ought not be able to use an early retirement package to defeat a right to support: see Hurst v. Hurst (2008), 2008 CanLII 49159 (ON SC), 58 R.F.L. (6th) 377 (S.C.), at para. 35.
[56] I make the following four observations about the bona fides of Mr. DiStefano.
[57] The first is that on May 30,2020, Mr. DiStefano first received his offer for a retirement incentive package. On June 2, 2020, his lawyer wrote to Ms. DiStefano. He simply said that Mr. DiStefano is retiring effective June 2020, and that as a result of the equalization of the Chrysler’s pension, spousal support obligation has come to an end. There was no room for negotiation in that letter, notwithstanding that Mr. DiStefano had until July 10 to notify his employer whether he accepted that offer.
[58] The second is that Mr. DiStefano may possibly owe Ms. DiStefano a significant sum of money for retroactive spousal support as a result of his failure to notify her of the material change in circumstances with respect to his income. As said above, he had a legal obligation to provide her with financial statements each year given that the significant increases in income likely amount to a material change in circumstances. In that way, she would be in a position to either accept or act on his changes of income as they occurred.
[59] The third is that although Mr. DiStefano’s $20,000 new car voucher was buried in his materials, it did not appear in his financial statement where it ought to have. This faux pas is however, to some extent, blunted by the failure of Ms. DiStefano to disclose the $12,000 in CERB payments that she received this year in her financial statement.
[60] The fourth is that Mr. DiStefano is currently in arrears because he has not yet made his September spousal support payment. Given that his spousal support payments are otherwise current and have been at least reasonably current throughout the relevant timeframe, I did not give much weight to this factor.
[61] In summary, Mr. DiStefano is not coming to the court with entirely clean hands. His blameworthy conduct has potentially resulted in a significant underpayment of spousal support in the past which may possibly translate into a retroactive lump sum payment, or possibly an increase in the duration of spousal support, or possibly both.
9) Conclusions
[62] In conclusion, both parties have needs which apparently exceed their respective means. When viewed in isolation, Mr. DiStefano has a strong case for termination of spousal support. However, when viewed in the context of the entire factual matrix that conclusion is not nearly as certain. The possibility that Ms. DiStefano is currently unable to work due to illness and has been unable to work since the termination of the marriage is a relevant consideration. Similarly, the failure of Mr. DiStefano to make timely disclosure of the changes in his income is a relevant consideration.
[63] Simply put, I am unable to determine the likely outcome of this case on the basis of the record before me. That determination will require the beneficial features of a trial including, without limitation, cross examination and proper evidence as to Ms. DiStefano’s health between the date of separation and today.
[64] In the circumstances, I find it fair to reduce Mr. DiStefano’s spousal support obligations.
[65] Presuming Mr. DiStefano is successful at trial as to the issue of his decision to retire, and Ms. DiStefano is successful at trial as to her claims as to her health, I find it possible a spousal support order could be made based on their then-current incomes. That will be about $19,000 per year for the unequalized portion of Mr. DiStefano’s pension and about $7,000 a year for Ms. DiStefano from employment. Midrange spousal support would be about $350 per month.
[66] An award for that amount made at this time could cause irreparable harm to Ms. DiStefano in that it may cause her to lose her house. Accordingly, I do not find it appropriate. At the same time, I find it appropriate to recognize Mr. DiStefano’s current financial position. It seems to me that the interests of both parties would be most appropriately balanced by reducing the current order by 50% on an interim, interim and without prejudice basis until a better evidentiary record is available.
C. ORDER
Paragraphs 6 and 7 of the Divorce Order of Quinn J. dated January 10, 2010 are rescinded.
Commencing October 1, 2020, the respondent Joe DiStefano shall pay the applicant Rose DiStefano $800 per month in spousal support commencing October 1, 2020. That is on an interim, interim and without prejudice basis.
This matter shall go to a conference at the first possible opportunity. I encourage the parties to be ready for meaningful participation.
Given the very mixed results, this does not seem to me to be an appropriate case for costs. In the event that either party disagrees with me and would like to make further submissions, and in the event that the parties are unable to agree on costs within seven (7) days, then costs submissions shall be in writing on the following basis:
a) The counsel for the party requesting costs (“the requesting party”) shall serve a "Cost Outline" as provided for in Rule 57.01(6) (using Form 57(b)) upon counsel for the other party within five (5) days. In the event the foregoing is not complied with within that time period, the requesting party shall be deemed to have waived their right to do so.
b) The other party shall have a further five (5) days to serve a "Cost Outline" as provided for in Rule 57.01(6) (using Form 57(b)) on the requesting party. In the event the foregoing is not complied with within that time period, the other party shall be deemed to have waived their right to do so.
c) The requesting party shall have two (2) further days to provide a reply to the other party. Such reply is to be no more than one (1) page in length. In the event the same is not complied with within that time period, the requesting party shall be deemed to have waived their right to do so.
d) Once all of those steps have been completed, counsel for the requesting party shall provide all the submissions to the court through Trial Co-ordination.
e) The costs submission shall be double-spaced and use a "Times New Roman" font no smaller than 12 pitch. All references to the length of submissions exclude Bills of Costs and Costs Outlines and any Offers to Settle.
Original Signed by “Justice C.M. Bondy”
Christopher M. Bondy
Justice
Released: September 21, 2020
COURT FILE NO.: FS-08-7271-02
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Rose DiStefano
and
Joe DiStefano
ENDORSEMENT
Bondy J.
Released: September 21, 2020