Court File and Parties
COURT FILE NO.: FS-17-0274-03 DATE: 2024-04-02
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Richard Lammi, Applicant Lakshani Perera, for the Applicant
- and -
Dwana Lammi, Respondent Michael Cupello, for the Respondent
HEARD: December 1, 2023 & March 18, 2024, at Thunder Bay, Ontario
R.S.J. W.D. Newton
Reasons For Judgment
Overview
[1] There are two issues in this trial:
a. whether Mr. Lammi’s spousal support obligation to Mrs. Lammi should bind his estate; and
b. if so, should the estate’s obligation be secured in some way.
[2] All other issues arising from their marriage breakdown have been resolved.
Settlement
[3] The parties signed Minutes of Settlement dated February 22, 2019, “dealing with all issues aside from the issue of security for spousal support, if any, and the issue of what is to occur with respect to spousal support should (Mr. Lammi) pre-decease (Mrs. Lammi).”
[4] The Minutes of Settlement, the terms of which were incorporated into a Final Order dated April 9, 2019, provided as follows:
In full satisfaction of equalization of net family property and the joint accounts held by the parties, [Mr. Lammi] shall make an equalization payment to [Mrs. Lammi] in the amount of $176,000.00. …
Commencing March 1, 2019, and on the each month thereafter [Mr. Lammi] shall pay spousal support to [Mrs. Lammi] in the amount of $1,200.00 per month.
The spousal support shall be claimed as income by [Mrs. Lammi] and claimed as a tax deduction by [Mr. Lammi].
The spousal support shall be reviewable upon a material change in circumstances.
Arrears of spousal support owed from [Mr. Lammi] to [Mrs. Lammi] as of February 28, 2019 shall be fixed at $3,630.00…
The spousal support shall terminate absolutely upon [Mrs. Lammi's] death.
Each party shall pay their own legal costs.
The issue of security for spousal support, if any, is still an outstanding issue left to be determined by the parties. The issue of [Mr. Lammi’s] death, if it occurs prior to [Mrs. Lammi’s] death, and how it will impact spousal support is also an issue left to be determined by the parties.
[5] Over four years after reaching this partial settlement the parties had still not resolved the issue of security for spousal support and whether the support order binds the estate.
The Facts
[6] The uncontested facts include:
a. The parties began living together in June 2004.
b. Both parties were retired when they began to cohabit.
c. When they began to cohabit, Mr. Lammi was 62; Mrs. Lammi was 58.
d. They married on July 25, 2009, and separated six years later in July 2017.
e. This was a second marriage for both parties.
f. They cohabited for 13 years.
g. At separation, Mr. Lammi was 75; Mrs. Lammi was 71.
h. Mrs. Lammi received the equalization payment of $176,000.
i. Mr. Lammi is currently 82; Mrs. Lammi is 78.
j. Mr. Lammi has monthly income of $5,620.97 from CPP, OAS, and his employment pension, for a total annual income of over $68,000. He has net worth of about $330,000 consisting of his home, which is mortgaged, and investments. He has a life insurance policy with a face value of $32,873. The beneficiaries are his daughters. He is no longer insurable.
k. Mrs. Lammi has monthly income of $806.63 from OAS, $339.54 from CPP, and $1,200 from spousal support, for at total annual income of just over $28,000. She has assets valued at about $40,000 consisting of a car and $30,000 in savings.
[7] Mr. Lammi is in declining health and may soon be required to sell his home and move into long-term care or other assisted living arrangements. Mrs. Lammi rents living accommodations and needs spousal support to continue after Mr. Lammi’s death to meet her modest living expenses.
[8] The evidence is unsatisfactory as to what Mrs. Lammi did with the equalization payment. She testified that she received $75,000 after payment of legal fees and paid debts including a line of credit. I do not accept that she incurred legal fees as she suggests. On cross-examination it was clear that Mrs. Lammi, perhaps innocently, overstated her actual living expenses.
Positions of the Parties
[9] Mrs. Lammi seeks an order that Mr. Lammi’s estate be bound by the support order, that she be made the primary and irrevocable beneficiary of the $32,873 life insurance policy, and that she have a further charge upon the estate of $100,000 secured either by a second mortgage on Mr. Lammi’s home or other security against his investments. Mrs. Lammi argues that she is in need and that Mr. Lammi’s disproportionate wealth should be made available for her needs.
[10] Mr. Lammi seeks an order that spousal support terminates on his death. He argues that an attempt to bind his estate and seek security for support after his death is “double dipping” by Mrs. Lammi who has been paid her equalization payment and been paid her past and current spousal support at the high end of the Spousal Support Advisory Guidelines. He argues that he has had to remortgage his house to pay the equalization payment to Mrs. Lammi, and that his modest savings will be required to support him in his old age.
Analysis and Disposition
[11] In Katz v. Katz, 2014 ONCA 606 (“Katz”), the Court of Appeal for Ontario recognized that the court has power to secure payment of support payments that are binding on the payor’s estate, but also noted the following:
[74] That said, where there is no existing policy in place, a court should proceed carefully in requiring a payor spouse to obtain insurance. … Careful consideration should be given to the amount of insurance that is appropriate. It should not exceed the total amount of support likely to be payable over the duration of the support award. Moreover, the required insurance should generally be somewhat less than the total support anticipated where the court determines that the recipient will be able to invest the proceeds of an insurance payout. Further, the amount of insurance to be maintained should decline over time as the total amount of support payable over the duration of the award diminishes. The obligation to maintain insurance should end when the support obligation ceases – and provision should be made to allow the payor spouse to deal with the policy at that time. Finally, when proceeding under the Divorce Act, the court should first order that the support obligation is binding on the payor’s estate. [Emphasis added.]
[12] This is a non-compensatory claim based on need and on the drop in the standard of living of Mrs. Lammi.
[13] This is not the usual case where insurance is ordered to secure the payment of future child or spousal support in the case of premature death.
[14] At this stage, unfortunately, Mr. Lammi’s death could not be regarded as unanticipated. The agreement between the parties provides that Mrs. Lammi’s entitlement to support ends upon her death.
[15] Mr. Lammi’s income will cease upon his death, the ultimate material change in circumstance.
[16] I accept that Mrs. Lammi is in need of spousal support and that this will continue after Mr. Lammi’s death.
[17] While Mr. Lammi is in a better financial position than Mrs. Lammi, after payment of taxes, his mortgage, property taxes, and spousal support, he is left with about $3,500 for his monthly expenses, a surplus which will continue until his death. He is not wealthy and, no doubt, will require expensive assisted living in the future if he lives.
[18] The request that I order that Mrs. Lammi be the irrevocable beneficiary under the life insurance policy is contrary to the agreement of the parties that provides that the support obligation terminates upon Mrs. Lammi’s death.
[19] With respect to previous equalized property, Mrs. Lammi had an obligation to use her share of the divided property to generate income to make a contribution to self-sufficiency. I am not satisfied with her explanation as to the disposition of the equalization payment. However, economic hardship and need may justify an exception to this general rule.
[20] In the circumstances of this case, which includes the “late” cohabitation and marriage after retirement of both parties, the financial circumstances of both parties, and the future needs of both parties, I order that there be a limited support obligation upon Mr. Lammi’s estate. I order that, if Mrs. Lammi does not predecease Mr. Lammi, she shall have a claim for support that will bind the estate limited to $25,000. I make no order for security for that obligation recognizing that Mr. Lammi is uninsurable and that any order for security would complicate the future sale of Mr. Lammi’s home. The amount of support that will bind the estate has been determined by the factors as set out in Katz above.
[21] Should the parties be unable to agree as to costs, the party seeking costs shall submit cost submissions limited to three pages plus costs outline within 30 days of the release of the decision. The responding party shall deliver their cost submissions, subject to the same limitations, within 10 days of the delivery of the other party’s submissions. If no cost submissions are received within 30 days then costs are deemed settled.
Released: April 2, 2024 Newton J.