COURT FILE NO.: FS-09-16296-0001 (Toronto) DATE: 20220321 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

noel parAgua Applicant (Moving Party) – and – silva lola Respondent (Responding Party)

Counsel: Adam Jaffer, for the Applicant Rajesan Rajendran, for the Respondent

HEARD: February 17, 2022

R. A. Lococo J.

REASONS FOR JUDGMENT

I. Introduction

[1] Following his retirement, the applicant Noel Paragua brings a motion to change the final order of Paisley J. dated February 28, 2011. Noel is now 63 years old. He seeks termination of his obligation to pay spousal support to his former wife, the respondent Silva Lola. Silva is 66 years old and has a disability. Silva argues that Noel has an on-going spousal support obligation to her. She also seeks reimbursement of half of the amount she paid to discharge a contested joint debt addressed in the final order. Noel does not dispute Silva’s entitlement to reimbursement but seeks extended payment terms.

[2] For the reasons that follow, I have concluded that Noel’s motion to change should be dismissed. I am also ordering that Noel reimburse Lola for the amount she paid to discharge his portion of joint debt, on the terms indicated below.

II. Background facts

A. Separation and final order

[3] Noel and Silva separated in 2008 after over 26 years of marriage. There were no children of the marriage. Noel commenced matrimonial proceedings that were settled on consent on the terms set out in the 2011 final order. That order gave effect to the parties’ minutes of settlement and included the following terms:

a. Spousal support: Noel was required to pay spousal support to Silva in the amount of $900 per month, commencing May 1, 2011, increased annually in accordance with the indexing factor in s. 34(6) of the Family Law Act, R.S.O 1990, c. F-3. Spousal support was not reviewable before May 1, 2014: final order, at para. 8. Until Noel’s support obligation ended, Noel was required to keep in place a life insurance policy with his employer that irrevocably designated Silva as beneficiary of the policy: at paras. 10 and 11.

b. Matrimonial home/encumbrances: Noel was required to transfer his interest in the matrimonial home to Silva: para. 1. Silva was required to discharge encumbrances totalling approximately $330,400, which included a first mortgage with an approximate balance of $304,800: at paras. 3, 4 and 5.

c. Equalization/property claims: The parties acknowledged that Noel’s transfer of the matrimonial home to Silva and Silva’s discharge of the encumbrances would constitute full satisfaction of the parties’ equalization and property claims: at para. 12.

d. Liability for debts: The parties were responsible for the debts in their own names and also acknowledged that each of them was liable for half of a contested timeshare loan if pursued in an action against them: at para. 7.

B. Noel’s employment, retirement and income

[4] When the final order was made in 2011, Noel was 52 years old and employed by Toronto Hydro in the Cable Crew Department. His annual income that year was $80,862. By 2014 (the year the spousal support order became reviewable), his income was $112,638. His income was $110,691 in 2015, $116,590 in 2016 and $116,195 in 2017.

[5] Noel retired from Toronto Hydro as of June 30, 2018. He was then a few months short of turning 60. Prior to his retirement, he was a crew leader in the Cable Crew Department and had been a Toronto Hydro employee for 29 years. The circumstances of Noel’s retirement were set out in an affidavit dated January 10, 2022, sworn by the former supervisor of the Cable Crew Department (now retired), as summarized below.

a. The former supervisor was in charge of the Cable Crew Department until it was permanently disbanded as a cost-cutting measure in early 2019, a few months before the former supervisor himself retired in June 2019. Noel was a crew leader in the department, who reported to the former supervisor.

b. In late 2017, the former supervisor and other members of the Cable Crew Department were informed that the department was to be disbanded as part of cost-cutting measures, with all positions in the department to be terminated by early 2019 and the department removed on a permanent basis in June 2019.

c. They were also advised that changes to pensions and retirement benefit packages were coming into effect as of January 1, 2020, as part of the cost-cutting measures. As a result of those changes, long-term employees (with more than 25 years’ service, like Noel and the former supervisor) who did not retire by January 1, 2020, would have their pensions downgraded from a Class “A” pension to a Class “B” pension, with the result that the pension and retirement benefits payable to such employees would be potentially reduced by half.

d. At the time that Noel accepted the retirement package and retired in June 2018, the majority of the positions within the Cable Crew Department were in the process of being removed.

e. As a result of the disbanding of the Cable Crew Department and the announced changes in the pension and retirement benefits, all (or virtually all) of the long-term employees in the department who qualified for Class “A” pensions accepted retirement packages by early 2019, other than the former supervisor, who was the last remaining department member upon his retirement in June 2019.

[6] Including payments Noel received as part of his retirement package, his income was $128,479 in 2018 and $145,126 in 2019. As of January 1, 2020, Noel’s pension was the source of all or substantially all of his income. His 2020 income was $71,599. He did not apply to receive reduced CPP benefits at or after age 60, as he was entitled to do.

C. Silva’s employment, retirement and income

[7] When the final order was made in 2011, Silva was 55 years old and employed as a social worker. Her annual income that year $54,819. In 2014, her annual income was $67,644.

[8] In 2015, Silva was injured in the workplace, resulting in a permanent disability that limited her from performing her employment tasks. She became entitled to long-term disability benefits under her workplace benefits policy, workers’ compensation (WSIB) benefits and Canada Pension Plan (CPP) disability benefits, resulting in a reduction in her income of approximately 20 per cent, to the approximate level of her 2011 income.

[9] As a result of her disability, Silva was required to retire from her employment in October 2020 at age 65. Her only current income is pension income, totalling approximately $46,600, consisting of her workplace pension, CPP benefits and Old Age Security (OAS) benefits. She began to collect CPP and OAS benefits when she turned 65. She did not apply for payment of reduced CPP benefits in or after 2016, when she turned 60.

D. Court proceedings

[10] Noel brought his motion to vary the 2011 spousal support order by Motion to Change dated April 28, 2021. Silva filed her Response in June 2021 (on consent), opposing the requested variation. A case conference was held in September 2021. The motion to change was scheduled to be heard as a short motion on January 20, 2022, but the presiding judge declined to hear the motion at that time. He provided directions for revised factums and adjourned the matter to February 17, 2022, when the motion to change came before me for a hearing by video conference upon affidavit evidence.

III. Parties’ positions and issues to be decided

A. Noel’s position

[11] Noel argues that his retirement and resulting reduction in income constitute a material change in circumstances, which entitled him to seek review of his spousal support obligation. He characterizes his retirement as involuntary, given the elimination of his work position and the substantial reduction in his retirement benefits if he had not accepted a retirement package.

[12] Noel says that given his reduced circumstances resulting from his retirement, his spousal support obligation should be terminated as of January 1, 2020. He also says that he should be given additional time to reimburse Silva for payment she made to satisfy his share of their joint debt.

[13] Noel also submits that his income for support purposes should be adjusted downward to avoid double-recovery by Silva with respect to his pension entitlement (referred to as “double-dipping”). He says that his pension entitlement was already equalized under the final order, under which, among other things, he transferred to Silva his interest in the former matrimonial home, which has substantially increased in value. He also notes that Silva’s current income is not materially different than her income at the time of the final order and that her net worth is materially higher.

[14] Noel also argues that additional income should be imputed to Silva because of her failure to take steps to generate income from her increased equity in the former matrimonial home. He says that Silva is able to do so by either renting out the basement bedroom or by selling the property (or otherwise tapping into its equity value) and investing the proceeds.

B. Silva’s position

[15] Silva does not agree that there has been a material change in circumstances that justifies termination of Noel’s spousal support obligation. Silva disputes that his retirement was involuntary. That claim was not made in his April 2021 motion to change or at the case conference, nor was it raised until Noel’s affidavit of December 24, 2021. The evidence in support of that claim was not provided by his employer, but rather by a former Toronto Hydro employee in an affidavit provided a few days before the scheduled hearing of the motion. She also says that Noel’s current income and financial circumstances are not materially different than they were at the time the final order was made in 2011.

[16] If the court finds a material change in circumstances, Silva says that Noel should be found to have a continuing spousal support obligation, given her need for support and his continuing ability to provide it. She also disputes that Noel should be given additional time to pay his share of their joint debt, which is relatively modest in amount and not beyond his financial means.

[17] In addition, Silva does not agree that any reduction in Noel’s income for support purposes is warranted on the basis of double-dipping or that any additional income should be imputed to her. However, she argues that additional income should be imputed to Noel, given his continued ability to work and his failure to seek employment since his early retirement.

C. Issues to be decided

[18] Given the foregoing, the issues to be decided are as follows:

a. Material change in circumstances: Does Noel’s retirement (and the resulting financial consequences) constitute a material change in circumstances that permits him to seek a review of his spousal support obligation?

b. Double-recovery: Should Noel’s income for support purposes be adjusted downward to avoid double-recovery, taking into account the terms of the final order relating to equalization of the parties’ net family properties, including their pension entitlements?

c. Imputed income: Should additional income be imputed to either party with respect to foregone income that is available to them?

d. Joint debt payment terms: Should Noel be given additional time to reimburse Silva for the payment she made to satisfy his share of their joint debt?

[19] In the balance of these reasons, I will address each of those issues in turn.

IV. Material change in circumstances

[20] Does Noel’s retirement (and the resulting financial consequences) constitute a material change in circumstances that permits him to seek a review of his spousal support obligation?

[21] Before varying a spousal support order, as a threshold issue, the court must be satisfied that “a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the support order”: Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), s. 17(4.1). The change must be material, meaning a change that, “if known at the time, would likely have resulted in different terms”: L.M.P. v. L.S., 2011 SCC 64, [2011] 3 S.C.R. 775, at para. 32, citing Willick v. Willick, 1994 28 (SCC), [1994] 3 S.C.R. 670, at p. 688. The onus of establishing a material change in circumstances is on the party seeking the variation, with the court applying “a flexible standard of judicial discretion which does not artificially limit the adaptability of the Divorce Act provisions”: Willick, at pp. 733-734; L.M.P, at para 31.

[22] Once the court makes the threshold finding of a material change in circumstances, s. 17(7) of the Divorce Act sets out the objectives that the court should consider when making an order varying a spousal support order. Those objectives include the following:

a. recognize any economic advantages or disadvantages to the former spouses arising from the marriage or its breakdown: s. 17(7)(a);

b. relieve any economic hardship of the former spouses arising from the breakdown of the marriage: s. 17(7)(c); and

c. in so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time: s. 17(7)(d).

[23] The same objectives also apply at the time an original spousal support order is made: Divorce Act, s, 15.2(6). Where the terms of a spousal support order reflect an agreement between the parties, “the terms can therefore be presumed, as of that time, to have been in compliance with the objectives of the Divorce Act when the order was made”: L.M.P., at para. 39.

[24] Noel argues that his retirement and resulting reduction in income constituted a material change in circumstances. He characterizes his retirement as involuntary, given the elimination of his work position and the substantial reduction in his retirement benefits if he had not accepted a retirement package. In support of his position that his retirement was a material change in circumstances, he relied on previous case law, including Strang v. Strang, 1992 55 (SCC), [1992] 2 S.C.R. 112, at pp. 115-116, 121, and Parker v. Parker, 2014 ONSC 4211, at para. 15.

[25] Having considered the submissions in support of Noel’s position, I am not persuaded that he has met his onus of establishing a material change in circumstance in this case. In particular, I have concluded that he has not established that his retirement was involuntary. I also agree with Silva that his income for support purposes going forward is not materially different than it was when the spousal support order was made in 2011.

[26] I do not consider Parker or Strang to provide any material support for Noel’s position that there was a material change of circumstances occasioned by an involuntary termination of employment.

[27] In Strang, there was no factual issue as to whether the support payor’s termination was voluntary. In that case, the court states, at p. 115, that the support payor at the age of 58 “was terminated and … forced to take early retirement.” As well, the support payor actively sought alternative employment but was unsuccessful in finding full or part-time work. In these circumstances, the Supreme Court found no error in the appeal court’s decision to decline to interfere with the motion judge’s decision to terminate spousal support as a result of the support payor’s change in circumstances: at p. 121.

[28] In Parker, the motion judge carefully considered the evidence (which he considered persuasive) about the early retirement package that the support payor’s employer offered and the limited options available to the payor if he did not accept the package: at para. 8. The support payor also provided evidence of the search he undertook to find alternative employment and his lack of success in finding another job, other than part-time seasonal employment he accepted that paid him a considerably reduced income: at para. 9. In these circumstances, the motion judge found that the support payor’s decision to leave his employment was a reasonable and supportable one and was not made for the purpose of avoiding his spousal support obligations, nor did it indicate any bad faith: at para.15. The motion judge therefore found that there was a material change in circumstances that justified review of the spousal support order: at para. 18.

[29] In summary, in Parker and Strang, the court had no difficulty finding that the circumstances under which the support payor’s employment ended did not constitute a voluntary termination. I agree with Silva’s counsel that the late-breaking evidence that Noel provided in support of his position was less than compelling and was not sufficient to establish that Noel’s retirement was involuntary. No explanation was provided as why the affidavit provided was not directly from Noel’s former employer or supported by documents from his employment file: see Rothschild v. Sardelis, 2015 ONSC 5572, at para. 64. Instead, the affidavit of Noel’s former supervisor largely consisted of second-hand information and general statements about such matters as the financial consequences of failing to accept the early retirement package, including having pension and retirement benefits “potentially halved”, without further support or elaboration.

[30] In addition, in Parker and Strang, there was evidence of the support payor’s efforts to find alternative employment, supporting the conclusion that the support payor’s retirement was involuntary. There was no such evidence in this case.

[31] As well, as indicated further below, the evidence supports the conclusion that Noel’s current income for support purposes ($71,599 in 2020) is not materially different than his 2011 income of $80,862. In any case, when he turns 65 in less than two years, he will be in a position to earn more than he did in 2011, taking into account the CPP and OAS benefits he will be entitled to at that time. Indeed, he could have been collecting reduced CPP benefits at age 60 shortly after he retired, had he chosen to do so.

[32] In these circumstances, I am not satisfied that Noel has met his onus of establishing that there has been a material change in circumstance that justifies review of the 2011 spousal support order.

V. Double-recovery

[33] Should Noel’s income for support purposes be adjusted downward to avoid double-recovery, taking into account the terms of the final order relating to equalization of the parties’ net family properties, including their pension entitlements?

[34] Noel submits that his income for support purposes should be adjusted downward to avoid double-recovery by Silva with respect to his pension entitlement. Noel says that any spousal support payments he would be required to make going forward would be payable from his pension benefits, which is now his only source of income. According to Noel, since his pension entitlement was already equalized as part of the final order, his income support purposes should be reduced to reflect that fact. By his calculation, his income for support purposes should be reduced by $22,291, being the amount of annual pension income set out in his pension report dated December 31, 2010 that was attributable to his pension interest as of that date. As a result, he says that no spousal support would be payable to Silva.

[35] The fallacy of that position is evident, given my finding that Noel has not established that his retirement was involuntary. If Noel had not voluntarily retired, his pension would not be his sole source of income. Therefore, his income for support purposes should not be reduced to avoid any double recovery that would otherwise arise from payment of spousal support out of pension income.

[36] That being said, even if the spousal support order were subject to review by reason of a material change of circumstances, I am not persuaded that Noel’s income for support purposes should be reduced to address the issue of double recovery by Silva with respect to his pension entitlement.

[37] In Boston v. Boston, 2001 SCC 413, [2001] 2 S.C.R. 868, the Supreme Court of Canada considered the issue of double recovery arising when a pension that was previously equalized as property is treated as a source of income to make spousal support payments: at para. 34. In that case, the support payor (husband) had a pension entitlement that formed part of his net family property, and the support payee (wife) did not. Upon equalization, the support payor’s share of the assets was approximately $385,000, of which $333,329 was attributable to the value of his pension. The support payee’s share was approximately $370,000, attributable to the value the matrimonial home and other non-pension assets. After the support payor’s retirement, his income was reduced by 13 per cent, his only income source being his pension, together with CPP and OAS benefits. He had no significant capital assets at that time, unlike his former wife, who had invested prudently and has assets worth $493,000.

[38] In these circumstances, the Supreme Court found that the motion judge did not err in concluding there had been a material change in circumstances and that the support payor’s income for support purposes should be reduced by the monthly pension amount attributable to the value of the pension entitlement at the time of equalization. Therefore, the court found that the motion judge did not err in reducing the monthly spousal support payment from $3,200 per month to $950 per month (before indexing).

[39] In its analysis of the double recovery issue, the Supreme Court, at pars. 63, states as follows:

How is double recovery fairly avoided? … It is generally unfair to allow the payee spouse to reap the benefit of the pension both as an asset [at the time of equalization] and then again as a source of income [after the support payor’s retirement]. This is particularly true where the payee spouse receives capital assets which she then retains to grow her estate. [Citations omitted.]

[40] With respect to the latter point, the Supreme Court also notes that “it may be unreasonable to expect the payee spouse to generate investment income from the matrimonial home”, and that “[g]enerally, the payee spouse would not be expected to sell or leave the matrimonial home, particularly if there are dependent children”: at paras. 59-60.

[41] I agree with Silva’s counsel that the principles set out in Boston with respect to the avoidance of double recovery do not assist Noel in the present case. In Boston, the court focuses on the unfairness that arises when upon equalization the support payor retains a significant asset that generates no income until retirement (the payor’s pension entitlement) and in the process gives up assets that the support payee is able use to generate income. In the matter before me, unlike in Boston, one of the assets that Silva retained as part of equalization was her entitlement under her own pension, which she could not access until her own retirement and now constitutes the primary source of her income going forward, together with CPP and OAS benefits. The aggregate of those amounts is less (although not materially less) than her income at the time of the final order. It is fair to conclude that unlike Noel, she has little or no prospect of earning additional employment income, given her disability and age.

[42] The only other significant asset Silva retained on equalization was the matrimonial home, which she describes as a small two-bedroom bungalow (with an additional bedroom in the basement), valued at approximately $350,000 at the time of equalization. Net of encumbrances of approximately $330,400 that Silva was required to discharge, the home had little equity value upon equalization. However, given current inflated real estate values, Noel says that the property now has a potential value approximately $1 million, and is subject to a mortgage of approximately $500,000.

[43] As previously noted, Noel argues that additional income should be imputed to Silva because of her failure to take steps to generate income from her increased equity in the former matrimonial home. He says that Silva is in a position to do so by either renting out the basement bedroom at market rates or by selling the property (or otherwise tapping into its equity value) and investing the proceeds.

[44] I do not agree that additional income should be imputed to Silva. I accept her evidence that the only time that the basement bedroom has been rented was to her nephew for a brief period and that given its configuration and condition, renting it out to an outside party is not a realistic option. As well, as suggested in Parker, at paras. 59-60, even though dependant children are not a factor in this case, I do not consider it reasonable to suggest that Silva should sell her home where she has lived for many years. As well, I do not consider it reasonable to suggest that Silva should be required to borrow against her home equity and invest the proceeds in order to generate additional income, particularly in the current uncertain times. I see no evidentiary basis for making such a determination in this case.

[45] Accordingly, even if the spousal support order were subject to review, I am not persuaded that as a matter of fairness Noel’s income for support purposes should be reduced to avoid double recovery by reason of the principles set out in Boston.

VI. Imputed income

[46] Should additional income be imputed to either party with respect to foregone income that is available to them?

[47] For the reasons indicated above, I am not persuaded that any additional amount of income should be imputed to Silva relating to her interest in the former matrimonial home. As well, there is no issue that she would not be in a position to earn income from employment, given her disability and age.

[48] Given my conclusion that Noel’s current income ($71,599 in 2020) is not materially different than his annual income at the time of the final order in 2011, it is not necessary to decide whether additional income should be imputed to Noel for support purposes. However, as noted above, when he turns 65 in less than two years, he will be in a position to earn more than he did in 2011, taking into account the CPP and OAS benefits, and could have been collecting reduced CPP benefits at age 60, had he chosen to do so. As well, there is no evidence that he was incapable of working after his early retirement or of any efforts he made to find employment.

VII. Joint debt payment terms

[49] Should Noel be given additional time to reimburse Silva for the payment she made to satisfy his share of their joint debt?

[50] Noel does not dispute Silva’s entitlement to reimbursement for the payment she made to satisfy his share of their joint debt. However, because he was not consulted in 2015 at the time that Silva made the lump sum payment of $6,293.30 to a collection agency to satisfy the debt, Noel argues that he was not provided the opportunity to negotiate terms that would have allowed him to pay over time. He therefore requests extended payment terms (beyond the usual 30 days from the date of judgment) to reflect his current circumstances, but no specific payment terms were suggested.

[51] While I appreciate that Noel may have missed the opportunity to negotiate payment terms, the fact remains that the debt in question is an old one that pre-dated the 2011 final order. Silva has in effect extended credit to Noel for his portion of the debt since 2015 and should not have to wait much longer for reimbursement.

[52] The final order will require that Noel pay $3,146.65 to Silva to reimburse her for satisfying his share of their joint debt, plus post-judgment interest at the statutory rate from the date of these Reasons for Judgment. The amount owing shall be satisfied by paying Silva (in addition to the monthly spousal support payment) a minimum of $1,500 by June 1, 2022 and a minimum of $900 by the first day of each subsequent month until the amount owing is repaid.

VIII. Disposition

[53] Accordingly, a final order will issue as follows:

1. Noel’s motion to change is dismissed.

2. Noel shall pay $3,146.65 to Silva to reimburse her for repaying his share of their joint debt, plus post-judgment interest at the statutory rate from the date of these Reasons for Judgment. Noel shall satisfy the amount owing by paying Silva a minimum of $1,500 by June 1, 2022 and a minimum of $900 by the first day of each subsequent month until the amount owing is repaid.

3. If not settled between the parties, costs shall be determined following written submissions.

[54] At my prompting on the hearing date, counsel discussed whether the parties were able to agree on costs. I was advised that they did not agree, but I am confident they will be able to do so after further discussion.

[55] If after further discussion the parties cannot agree on costs, the respondent may serve and file brief written submissions (not to exceed three pages) together with a bill of costs and any relevant offers within 21 days. The applicant shall have 14 days to respond by brief written submissions (not to exceed three pages) together with a bill of costs and any pertinent offers. If submissions are not received within the specified timeframe, the parties will be deemed to have settled costs.

R. A. Lococo J. Released: March 21, 2022