Court File and Parties

COURT FILE NO.: FS-09-352671-00003 DATE: 20240115 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Theodora Georgia Lafazanidis, Applicant – and – Konstantino Lafazanidis (aka Danny Lafanzanidis), Respondent

Counsel: Absent, for the Applicant Jack M. Straitman, for the Respondent

HEARD: In Writing

Reasons for Judgment

M. Kraft, J.

[1] This is a Motion to Change brought by the husband in this case to terminate his spousal support obligation because he has retired and to confirm that the parties’ 18-year-old son remains a child of the marriage, entitled to child support. The husband also seeks to reduce the amount of security he is maintaining for his support obligations.

[2] The respondent, Konstantino Lafazanidis (“Danny”), the moving party, is now 60 years old. The applicant, Theodora Georgia Lafazanidis (“Theodora”), the responding party to this Motion to Change, is now 49 years old.

[3] The parties were married on February 24, 2001 and separated on May 20, 2009, after just over 8 years of cohabitation. They were divorced by the judgment of Mesbur, J., dated May 29, 2014 (“the 2014 Mesbur Divorce Order”), after a 9-day trial. They have one child, D.G.L., born April 3, 2005, a son, now age 18.

[4] The 2014 Mesbur Divorce Order provided, among other things, that

a. The parties were to share joint custody of D.G.L.;

b. D.G.L. was to reside with the parents on a week on/week off basis;

c. D.G.L. was to share his holiday time with the parties equally;

d. Starting June 1, 2014, Danny was to pay Theodora setoff table child support of $577 a month, based on an imputed income to Danny of $100,000 a year and an annual income to Theodora of $35,000 a year;

e. The parties were to share D.G.L.’s s.7 expenses on the basis of Danny paying 60% and Theodora paying 40%;

f. Starting June 1, 2014, Danny was to pay Theodora spousal support of $1,640 a month;

g. For as long as Danny was required to pay child and spousal support he was to maintain $350,000 of the death benefit of his $700,000 life insurance policy as security for his spousal support obligations and $350,000 as security for his child support obligations;

h. Danny was to pay Theodora a net equalization payment of $308,068; and

i. The parties were to list the Utah property they owned for sale and divide the net proceeds of sale equally between them.

[5] Mesbur, J.’s decision [1] indicates that Danny retained a Chartered Business Valuator (“CBV”) to prepare an income report for support purposes to determine his “actual” income for support purposes. In applying the CBV’s adjusted income approach to Danny’s income at the time of the trial, Mesbur, J. fixed Danny’s annual income at $100,000 for support purposes in 2014. In awarding spousal support for Theodora in the sum of $1,640 a month, Mesbur, J., explained that she used the high-end range of the Spousal Support Advisory Guidelines (“SSAGs”) , opining that that level of spousal support, along with child support based on a set-off of the parties’ table child support obligations will ensure that each party was able to provide a similar standard of living for D.G.L. The court found that the high-end range of spousal support compensated Theodora for the roles played during the marriage, particularly, the fact that she had been out of the work force for 8 years prior to separation. At the time of the trial, Mesbur, J.’s reasons confirmed that Theodora was a T4’ed employee earning $35,000 a year.

[6] In 2018, Danny brought a Motion to Change seeking to terminate spousal support. At that time, Danny no longer had a relationship with D.G.L. and the child was residing full time with Theodora. On May 23, 2019, Moore, J. made an order increasing Danny’s child support to the full table amount of child support under the Child Support Guidelines, SOR/97-175 (“CSG”) of $910 a month based on his income of $100,000; continuing the sharing of D.G.L.’s s.7 expenses at 60% for Danny and 40% for Theodora; providing that D.G.L. reside primarily with Theodora with Theodora to have sole decision-making responsibility for him; and dismissing Danny’s motion to terminate his spousal support obligation (“the 2019 Moore order”). The 2019 Moore Order, therefore, meant that Danny was obliged to continue to pay Theodora spousal support pursuant to the 2014 Mesbur Divorce Order in the sum of $1,640 a month.

[7] Typically, when child support is changed from a set-off calculation of table amounts to one parent paying full table child support, the spousal support would be adjusted downward, pursuant to the SSAGs. Danny attached as an Exhibit to his affidavit, sworn on January 10, 2024, support calculations showing that using an annual income of $100,000 for him, and an annual income of $35,000 for Theodora, he would be obliged to pay full table child support in the sum of $910 a month and the high-end of the SSAGs is $1,156 a month (not $1,640 a month), which would leave Theodora with 52.1% of the parties’ net disposable income. However, as noted above, Moore, J. did not reduce the spousal support Danny was obliged to pay, and, as a result, Danny has been paying Theodora $1,640 a month of spousal support, which leaves her with 56.1% of the parties’ net disposable income, an amount higher than the high-end range of the SSAGs.

[8] Danny has paid child and spousal support to Theodora since the parties’ separated in 2019. In total, Danny has paid spousal support to Theodora for 14 years, 6 years longer than the period of the parties’ cohabitation.

Issues to be Determined

[9] The issues I need to decide at this uncontested Motion to Change are:

a. Has there has been a material change in circumstances justifying a change to 2014 Mesbur Divorce Order, as amended by the 2019 Moore order, terminating Danny’s spousal support obligation to Theodora?

b. If the answer to a. is no, what is Danny’s income for support purposes and what quantum and duration of spousal support remains owing to Theodora?

c. Does D.G.L. remain a child of the marriage entitled to child support from Danny?

d. Is Danny obliged to continue to maintain security for his support obligations and if so, in what amount?

Issue One: Has there been a material change justifying a termination of Danny’s spousal support obligation?

[10] Danny seeks to terminate his spousal support obligation for the following three reasons:

a. His income has materially changed because he retired and sold his business in March of 2023;

b. He has paid spousal support for a longer duration than the range of the parties’ cohabitation and the maximum duration under the SSAGs was 9 years; and

c. Theodora is no longer in need of spousal support.

[11] The test for a material change in circumstances, as confirmed by the Supreme Court of Canada in L.M.P v. L.S., 2011 SCC 64, is a change that is substantial, continuing and that “if known at the time, would likely have resulted in a different order.” When an order is silent on retirement, as is the case with the 2014 Mesbur Divorce Order, retirement is generally considered a “material change” and is one of the reasons that spousal support may end.

[12] In this case, the most significant material change in circumstances Danny relies on is that as of October 31, 2022, he retired. At that time, Danny was 59 years old. Having sold his pool maintenance business, he submits that he no longer earns an income, other than from interest/investment income from capital.

[13] In terms of the parties’ respective employment and income background:

a. After the separation, Theodora was employed, earning approximately $35,000 a year at the time of the trial before Mesbur, J. Danny submits that after 2016, Theodora began to be self-employed. The financial statement sworn and filed by Theodora at the 2018 Motion to Change, confirms that Theodora was self-employed, running an art business, earning $32,360.

b. Danny’s pool maintenance business, 895306 Ontario Limited, which he operated as a one-man company, was known as “Avenue Road Pools”. Danny sold his pool company in March 2023 and, therefore, he has not worked since the Fall of 2022, when the pool season ended. The Agreement of Purchase and Sale for Danny’s pool business was filed as an Exhibit to Danny’s January 10, 2024 affidavit, and confirms it was sold for $250,000, payable on the basis of $150,000 immediately (in March 2023), and $50,000 in each of July and November 2023. Danny submits that now his sole source of income will be interest and investment income he earns on this capital along with his other capital.

[14] One of the questions to be asked when a payor retires is whether the retirement is “early” or “voluntary” and not necessary or reasonable. If that is the case, there will be close scrutiny of the decision to retire. “Early retirement” means retirement in the absence of health issues or other special circumstances before 65 years of age.

[15] When there is a Motion to Change, the court may take the view that the early or voluntary retirement does not amount to a “material change” and leave spousal support unchanged : Cossette v. Cossette, 2015 ONSC 2678 (Div. Ct.). However, early retirement will be accepted where justified by health issues: LeMoine v. LeMoine, [1997] N.B.J. No. 31 (C.A.).

[16] In Rothschild v. Sardelis, 2015 ONSC 5572, the court imputed employment income to a payor, but only for the one additional year they found he should have worked before retiring.

[17] In other cases, the courts have found the retirement decision itself to be reasonable, but then a part-time employment income is imputed to the early retiree. In Rothschild v. Sardelis, the court decided to impute employment income to the payor even though he had retired, but only for the one additional year he should have worked before retired. The SSAG Revised User Guidelines confirm that “when the early retiree’s income is imputed at or close to the pre-retirement level, the line between this “imputing” approach and determining that retirement does not constitute a material change approach disappears in practical terms.” [2]

[18] The question is, therefore, why did Danny retire at age 59? Was is because he could no longer work in the pool business or was it a voluntary/early retirement?

[19] Danny deposes that he sold his pool business in May 2023, because the value of pool businesses increased during the pandemic and he was concerned it would decrease in the future. As well, Danny claims he was no longer able to sustain the physical demands of his former business. Danny advised Theodora through counsel that May of 2021 that he would be retiring at the end of the pool season in 2022.

[20] In terms of his health, Danny describes a multitude of physical ailments, including neuropathy; a decrease in the strength of his right arm, for unknown reasons; having an enlarged liver, elevated blood pressure readings; being diabetic and suffering from an enlarged prostate and high cholesterol. No expert medical report was provided by Danny. Further, no clinical records or notes from any of the medical professionals treating Danny were provided as participant witness evidence. Instead, Danny attached a printout of various medications he takes on a daily basis. This information does not assist the court in any way in determining whether or not Danny is capable of being employed and/or whether his retirement in the fall of 2022 was medically necessary.

[21] Danny’s supplementary affidavit, sworn on January 9, 2024, attached his Notice of Assessment for 2022, showing his line 15000 income at $66,081. It is clear from Mesbur, J.’s reasons for judgment, however, that Danny’s reported income does not necessarily reflect his true income for support purposes.

[22] Danny deposes that his income in 2023 was $1,698 a month from interest and investments, totaling $20,376 a year. There is no report from a CBV calculating Danny’s adjusted or “true” income for support purposes. I note, however, that the budget portion of his financial statement reflects that Danny’s yearly expenses amount to $43,164. I cannot, therefore, confirm what Danny’s “true” investment/interest income is currently.

[23] In terms of Danny’s overall financial position, his sworn financial statement shows assets in excess of $2.7 million. In addition to the home in which Danny resides with his new partner in Toronto, which he estimates has a fair market value of $1,500,000, he owns a condominium in Greece worth $150,000; a 2022 Corvette worth $100,000; savings and savings plans, totalling $581,160.72; an RRSP of $241,228.83; and the capital from his share purchase agreement relating to his pool company of $100,000, resulting in him having total assets of $2,739,178.05. Danny does not explain why if he had received $150,000 of the $250,000 from the sale of his pool business when he swore his financial statement on May 9, 2023, he only has $100,000 remaining. The remaining $100,000 from the pool business sale has now been paid to Danny, thereby increasing his net worth to $2.8 million. His only debt, other than a contingent debt associated with his RRSP, is a credit card debt of approximately $8,000.

[24] If, after subtracting Danny’s home in Toronto and condominium in Greece, he has between $1 and $1.1 million to invest, at an interest rate of 2.5%, he would be able to earn $28,750 a year and Danny is reporting only $20,376 a year in interest income. It is impossible from the record before me to determine whether Danny is utilizing or maximizing his capital to earn as much interest/investment income as he ought to be.

[25] Danny submits that he retired early because his health issues made it difficult for him to continue in his line of work. I do not have any evidence on record to demonstrate that Danny needed to retire because of his medical conditions. While he details a number of health ailments, Danny’s evidence is that he sold the pool company because the value of such businesses increased after the pandemic. Mesbur, J.’s reasons for judgment confirm that his pool business had a loyal customer base and that Danny enjoyed a successful business career in the pool industry for about 30 years, at the time of separation. I suspect Danny agreed to sell his pool business because he was able to capitalize on the success of his business at the perfect time.

[26] I do find that Danny likely retired before it was necessary from a health perspective, but at a time when it made financial sense for him to do so. I am not persuaded by the evidence on the record that Danny’s retirement at age 59 was medically necessary but, rather, that it was voluntary.

[27] Turning to the other material changes Danny claims contribute to his termination of spousal support, Danny argues that he has paid spousal support to Theodora longer than the length of the parties’ cohabitation and what the SSAGs would require.

[28] The SSAGs initially relied on by Mesbur, J. were a “with child” formula, such that the duration of the initial calculation was “indefinite”, with time limits coming later through variation. Although Danny did not put the support calculations that were on the record before Mesbur, J. in this record before me, when I input the figures into the Divorcemate software using an income of $100,000 for Danny, and an income of $35,000 for Theodora, the “with child” formula, shows that the duration of spousal support would be “for an indefinite (unspecified) duration, subject to variation and possible review, with a minimum duration of 4 years and a maximum duration of 9 years from the date of separation.” [3]

[29] It is on this basis that Danny argues, he has paid spousal support for the past 14 years, and the length of the parties’ cohabitation was 8 years. On this basis, as well, Danny argues he is entitled to an order terminating spousal support.

[30] As identified by the SSAG Revised User Guidelines, there are two tests for duration under the SSAGs : the length-of-marriage test and the age-of-children test. The second test is more important for shorter marriages, as in this case, with a range that lasts until the child finishes high school. [4] for marriages shorter than 20 years, it is anticipated that at some point the economic disadvantages of the recipient will be fully compensated and, if there is no non-compensatory claim left, a time limit will be imposed and spousal support terminated.”

[31] I find that the fact that Danny has paid Theodora spousal support 6 years longer than the duration prescribed in the SSAGs persuades me to shorten the duration of any ongoing spousal support obligation I may find Danny has. However, in my view, the fact, in and of itself, that a payor pays spousal support longer than the duration specified in a “with-child” formula set out in the SSAGs does not necessarily equate with an automatic right to terminate spousal support, particularly with indefinite orders.

[32] The third material change in circumstances Danny submits justifies the termination of his spousal support is that Theodora no longer needs spousal support. The evidence on record is that:

a. At the time of the 2018 Motion to Change, Theodora produced a financial statement which provided that of the $400,000 of capital she had at the time of the Mesbur Divorce Order, (namely the equalization and her share of a property in Utah) only $120,000 remained, with no explanation offered.

b. Despite being asked for disclosure about an inheritance Theodora had received, specifically because no interest was shown on her Canadian income tax return disclosure, Theodora declined to produce any documentation about her inheritance, nor did she produce a copy of her U.S. income tax returns, which she had been filing throughout the parties’ marriage;

c. In March 2022, Danny advised through counsel that Theodora had failed to cash the child and spousal support cheques he had sent to her for the four-month period of September to and including December 2021, as well as for the four-month period of January to and including April 2022. In total, Theodora did not cash 8 months of child and spousal support amounting to approximately $30,000 (not taking the income taxes associated with spousal support into account).

d. On April 6, 2022, Danny replaced the four 2021 child and spousal support cheques with one cheque, which Theodora still had not cashed by April 21, 2022.

e. Given that Theodora’s 2018 sworn financial statement demonstrated she had depleted a significant amount of capital, and that she was earning $32,000 a year, her failure to cash Danny’s child and spousal support cheques led Danny to conclude that she was no longer in need of the support he was paying.

[33] Without evidence on the record from Theodora, I cannot conclude that the reason she did not cash the child and spousal support cheques from Danny in 2021 and 2022 is because she no longer has need for spousal support. This argument is not persuasive of Danny’s right to a termination of spousal support.

[34] The objectives of a variation order varying a spousal support order are set out in s.17(7) of the Divorce Act, R.S.C. 1985, c.3(2nd Supp.) A variation order varying spousal support should a) recognize any economic disadvantages or disadvantages to the former spouses arising from the marriage or its breakdown; b) apportion between the former spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of the child of the marriage; c) relieve any economic hardship of the former spouses arising from the breakdown of the marriage and d) in so far as practicable, promote the economic self-sufficiency of each former spouse with a reasonable period of time.

[35] I have considered the objectives of a variation order. Mesbur, J.’s reasons are clear that Theodora had a compensatory claim for spousal support. In 2018, once Danny no longer had a relationship with D.G.L. and the child was not living with him, Danny began to pay full table child support. Moore, J. did not reduce the spousal support at that time, as the SSAGs would have suggested. In that manner, Theodora had the benefit from June 2019 onward of receiving a quantum of spousal support that was more than the high-range of the SSAGs, as well as receiving spousal support for 6 years longer than the duration set out in the “with-child” formula under the SSAGs. However, given that I have found Danny retired early/voluntarily, an order requiring him to continue to pay spousal support on the “without-child” formula until he turns 62 meets the objectives of the Divorce Act in terms of a variation order, while also honouring Theodora’s compensatory claim of spousal sport and the fact that she shouldered the entire burden of child rearing without assistance from Danny with D.G.L.

[36] Based on all of the above, I find that Danny should continue to be imputed with an income of $100,000 a year as was the case before his retirement, for 2023 and until and including September 31, 2025, when he will turn 62 years of age. However, instead of paying spousal support in the sum of $1,640 a month as set out in the 2014 Mesbur divorce order, commencing January 1, 2024 and on the 1st day of the month of each following month to and including September 1, 2025, Danny shall pay spousal support to Theodora in the sum of $867 a month, being the high-end range of the SSAGs on the “without child support” formula. [5] As of September 31, 2025, spousal support for Theodora shall terminate.

Issue Two: Whether or not D.G.L. remains a child of the marriage entitled to child support from Danny?

[37] In his Motion to Change, Danny recognizes his obligation to continue to pay child support for D.G.L.. His Form 23C demonstrates that he is prepared to pay child support at the current level ($901 a month), without consideration for the fact that his income has reduced. However, Danny sought confirmation as to D.G.L.’s circumstances to confirm that he remains a child of the marriage entitling him to child support.

[38] In Danny’s supplementary affidavit, sworn on January 10, 2024, which was filed in response to a request from this Court for additional information, Danny deposes that at the completion of D.G.L.’s school year in June 2023, he enrolled in the army, and accordingly, he is no longer a child of the marriage. As a result, I find that as of July 1, 2023, D.G.L. is no longer a child of the marriage, entitled to child support. As a result, Danny’s obligation to pay full table child support for D.G.L. in the sum of $901 a month terminated as of July 1, 2023.

[39] Danny shall be given credit for paying child support to Theodora in the sum of $901 a month for the months paid from July 1, 2023 onward.

[40] In accordance with the CSG, If D.G.L.’s status as a “child of the marriage” resumes, then Danny’s obligation to pay child support to Theodora may be reinstated.

Issue Three: Whether or not Danny has to continue to maintain security for his support obligations and if so, in what amount?

[41] Danny seeks to no longer maintain $350,000 of his $700,000 life insurance policy as security for his spousal support obligations since he seeks a termination of his spousal support obligation. Given that I have found his spousal support obligation terminates at the end of September 2025, as of October 1, 2025, Danny will no longer need to maintain $350,000 of his $700,000 life insurance policy as security for his spousal support obligation. Until then, however, his obligation to maintain security for his spousal support obligation as per the 2014 Mesbur Divorce order continues in full force and effect.

[42] In terms of security for child support, in his Form 23C, Danny seeks to reduce his life insurance policy to $200,000, especially since Danny has $60,000 remaining in an RESP for D.G.L. Given that I have found D.G.L. is no longer a child of the marriage, Danny may release $350,000 of his $750,000 life insurance policy as security for child support.

Costs

[43] Danny seeks an order for the payment of his legal fees, disbursements and applicable taxes connected with this uncontested trial. He has submitted a Bill of Costs which indicate that he has incurred a total of $4,355.21, representing 6.5 hours of Mr. Straitman’s time, at an hourly rate of $585. He seeks recovery of this amount on a full indemnity basis.

[44] The successful party in family law litigation has no automatic right to full recovery of their costs. [6] However the Rules do provide for an entitlement to full recovery of costs in specific circumstances, including bad faith. [7]

[45] Theodora did not respond to Danny’s Motion to Change. As such he was put to the costs of having to prepare these materials, as well as having to provide the court with information that was before it in 2018 at the last Motion to Change and in 2014 at the initial trial of this matter. A further attendance was needed by Danny’s counsel to address these additional materials requested by the Court.

[46] I have reviewed the hourly rates of Danny’s lawyer, as well as his docketed time for the relevant period, and find all of it to be reasonable. I therefore award Danny costs on a full-recovery basis in the sum of $4,355.21, inclusive of fees, disbursement and HST.

Disposition

[47] Order to go as follows:

a. Pursuant to s. 17(4.1) and s.17(7) of the Divorce Act, commencing January 1, 2024 and on the first day of each following month, to and including September 1, 2025, the Respondent shall pay ongoing spousal support to the Applicant in amount of $867 a month.

b. Pursuant to s.15.2 of the Divorce Act, as security for his spousal support obligation, Danny shall maintain $350,000 of his $700,000 life insurance policy.

c. Pursuant to ss.17(4) and 17(6.1) of the Divorce Act, as of July 1, 2023, the Respondent’s obligation to pay child support for D.G.L. terminated. The respondent shall be given credit for any and all child support payments made to Theodora from July 1, 2023 to the date of the release of this endorsement, upon him providing proof to the court within 20 days, as to the amounts of child support paid by him, such sum to be reduced from the spousal support payments he owes pursuant to a. above.

d. Pursuant to s.15.2 of the Divorce Act, the Respondent’s obligation to maintain $350,000 of his $700,000 life insurance policy as security for his child support obligation terminates.

e. The applicant shall pay the respondent costs of this uncontested trial in the sum of $4,355.21 to be paid immediately. If the costs are not paid within 30 days of the release of this endorsement, the respondent shall reduce this sum from the total amount of spousal support owing by him.

M. Kraft, J. Released: January 15, 2024

Schedules

SCHEDULE “A” Calculation with Child Support Formula

SCHEDULE “B” Calculation without Child Support Formula

References

[1] Lafazanidis v. Lafanidis, 2014 ONSC 3287.

[2] Chapter 19 (a).

[3] See recreated support calculation prepared using the Divorce mate software attached as Schedule “A”.

[4] SSAGs, Revised User Guidelines, Chapter 8.5.5 (n).

[5] See support calculations attached as Schedule “B”.

[6] Beaver v Hill, 2018 ONCA 840, at para. 13.

[7] See Rule 24(18).