Court File and Parties

COURT FILE NO.: FC-12-1906-3 DATE: 2024-06-21 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Thomas Charles Charlton, Applicant AND Louise Christine Coburn, Respondent

BEFORE: The Honourable Mr. Justice Marc Smith

COUNSEL: Alexandra Kirschbaum, Counsel for the Applicant Yanik S. Guilbault, Counsel for the Respondent

HEARD: February 15, 2024

Reasons for Decision

M. Smith J

[1] The Applicant, Thomas Charles Charlton, seeks to terminate his obligation to pay spousal support to the Respondent, Louise Christine Coburn, effective December 9, 2021, and a reimbursement of all spousal support since that date. Alternatively, the Applicant seeks an order reducing spousal support payable and setting a termination date for the payment of spousal support in accordance with the Spousal Support Advisory Guidelines (“SSAG”).

[2] Ms. Coburn argues that a material change in circumstances has not occurred. Regardless, she seeks an order increasing spousal support, effective January 1, 2020, or alternatively that it be maintained at the current amount.

[3] For reasons that follow, the Court finds that Mr. Charlton shall make a lump sum payment to Ms. Coburn in the amount of $125,000.

Brief Facts

[4] The parties began cohabitating in October 1993.

[5] They were married in December 1996 and separated in January 2011.

[6] There are no children from this relationship.

[7] In 2014, the parties consented to an order whereby Mr. Charlton agreed to pay spousal support in the amount of $3,817 per month, representing the mid-range of the SSAG based on an income of $158,394. A change of $20,000 in Mr. Charlton’s income was considered as a material change in circumstances. Spousal support ended upon death.

[8] In 2016, Ms. Coburn brought a motion to change to vary the spousal support on the basis that Mr. Charlton’s income had increased to $182,092. She was successful in increasing spousal support to $4,317 per month.

[9] On January 10, 2019, Mr. Charlton was involuntarily terminated from his employment. He brought a motion to terminate or reduce spousal support as a result of this material change in circumstances.

[10] On May 27, 2020, Engelking J. ordered that spousal support be reduced to $1,070 per month, based on an imputed income of $40,000 for 2020 (Charlton v. Coburn, 2020 ONSC 2690).

[11] Mr. Charlton has not been employed since the order of Engelking J.

[12] On September 6, 2022, Mr. Charlton brought this motion to terminate or reduce spousal support based on a material change in circumstances, namely that he had reached retirement age of 65.

[13] This motion was heard on February 15, 2024. The parties were provided additional time to make written submissions regarding a lump sum payment. These were received March 28, 2024.

Issues

[14] The issues for this motion are:

a. Has there been a material change in circumstances? b. In the affirmative, should spousal support terminate, reduce, or increase?

Position of the Parties

[15] Mr. Charlton submits that having turned 65 years old on December 9, 2021, this constitutes a material change in circumstances that warrants a variation of spousal support. It is argued that there is no longer an expectation at law that he should earn employment income and spousal support should be terminated.

[16] Mr. Charlton says that he has more than met his obligation to support Ms. Coburn following their mid-length marriage, having paid $385,000 in spousal support since 2012. He has been drawing on his retirement assets since 2019 and because these assets were equalized in 2015, to continue to pay spousal support would constitute “double dipping”.

[17] Mr. Charlton concedes that Ms. Coburn has a disability. Had Ms. Coburn not been ill, it is argued that SSAG sets out a duration range of 8.5 to 18 years for this marriage. However, Ms. Coburn has received thousands in support, she has earned a profit from the sale of the home, and she has not prudently invested for her retirement.

[18] If the Court is not prepared to terminate spousal support at this time, Mr. Charlton proposes a lump sum payment, a step-down order or a termination date set within the ranges of SSAG.

[19] Ms. Coburn argues that Mr. Charlton’s age does not constitute a material change in circumstances. The parties agreed that spousal support was indefinite, and that it only terminates upon death.

[20] Ms. Coburn says that Mr. Charlton was imputed income at the previous motion in 2020, and that since then, his sources of income have not changed, nor has he ever made any efforts to find employment. Therefore, there is no material change in circumstances.

[21] Ms. Coburn submits that she continues to suffer from multiple sclerosis. Her financial situation is such that she requires ongoing support from Mr. Charlton. Based on Mr. Charlton’s financial resources, she seeks an increase in spousal support.

[22] Ms. Coburn denies the “double dipping” argument. However, even if the equalized assets were not taken into account, the spousal support should not be reduced because it falls within the range of the SSAG.

Legal Principles

[23] Sections 17(1) and 17(4.1) of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp) sets out the authority of the court to vary an order and the factors to consider in varying a support order, respectively.

[24] A material change in circumstances is a change that is substantial, it must have some continuity, and if it had been known at the time, it would likely have resulted in a different order: L.M.P. v. L.S., 2011 SCC 64, [2011] 3 S.C.R. 775, at paras. 29 to 37.

[25] An indefinite spousal order does not foreclose a payor’s application to reduce or terminate support obligations upon a material change in circumstances: Schulstad v. Schulstad, 2017 ONCA 95, at para. 31.

[26] When a recipient’s health prevents that person from working, it is relevant in the needs analysis. In determining quantum and duration, the SSAG is a useful tool: Gray v. Gray, 2014 ONCA 659 at paras. 28 and 42.

[27] A double recovery can occur when a pension changes from an asset into income. It is generally unfair that a recipient reaps the benefits of a pension both as an asset and then as a source of income. But if the support is based on need, double recovery may be permitted: Boston v. Boston, 2001 SCR 413, at paras. 3, 63 and 65.

Analysis

Issue #1 – Has there been a material change in circumstances

[28] The 2014 consent order did not address the prospect that Mr. Charlton would retire. It is unknown if Mr. Charlton’s retirement was contemplated by the parties at that time.

[29] At the motion to change before in 2020, Engelking J. refused to automatically terminate spousal support at the age of 65 because at that time, his income may be greater than the imputed income. The issue of retirement was not addressed.

[30] It is not disputed that Mr. Charlton has not worked since his termination in 2019, nor did he make efforts to find alternate employment after the 2020 motion to change.

[31] Mr. Charlton has niche skills. He was trained in a proprietary software language that was replaced by newer technology. In terms of his health, he has loss of hearing, he has nerve damage resulting from an auto-immune response to ParoVirus B19 and he was previously infected with Lyme Disease in 2020. It took him approximately 1.5 years to recover from Lyme Disease. He decided that it was time to retire and not return to the workforce.

[32] Based on these circumstances, it is reasonable that Mr. Charlton chose to retire. He has not done so to avoid his spousal support obligations. He continues to pay his spousal support based on the imputed income of $40,000, despite not receiving any employment income.

[33] He is currently 67 years old, and he is living on his investment income and withdrawals from his RRSPs. The effect of Mr. Charlton’s retirement needs to now be considered in the fixing of the spousal support.

[34] Mr. Charlton has established a material change in circumstances.

Issue #2 – Should spousal support terminate, reduce or increase?

[35] Ms. Coburn’s spousal support should not terminate at this time. She was diagnosed with Multiple Sclerosis in 2004 and she has not worked since then. She is 58 years old. Because of Ms. Coburn’s disability, this is a needs-basis case, and she has established an ongoing need for spousal support. The Court is unable to accept Mr. Charlton’s arguments that Ms. Coburn only requires compensation because of her poor planning decisions.

[36] That said, the Court agrees with Mr. Charlton’s position that it is in both parties’ interests that there be some form of finality and financial clarity. As such, the Court is of the view that a lump sum payment is appropriate in the circumstances. Such a payment will provide Ms. Coburn with the necessary capital to meet her needs.

[37] Both parties retained experts. Mr. Jamie Jocsak was retained by Ms. Coburn who opined that Mr. Charlton’s gross annual income would be approximately $94,000. Mr. Guy Martel was retained by Mr. Charlton who opined that Mr. Charlton’s projected income would be $75,190, taking into account that the assets were equalized at separation. In terms of Ms. Coburn’s income, Mr. Martel opined that once Ms. Coburn begins to draw on her assets, she will have $42,425 annually before the age of 65, $46,658 annually between 65 and 75, and $47,514 annually after the age of 75.

[38] The Court prefers Mr. Martel’s calculations because it provides a more complete picture of the parties’ financial situation, including the assets that were equalized at separation.

[39] Ms. Coburn has received half of the net family property at separation. When evaluating Ms. Coburn’s needs-based entitlement to spousal support, all her assets need to be considered. Furthermore, it is important that ongoing spousal support from Mr. Charlton’s retirement assets that have already been equalized needs to be adjusted to avoid double recovery.

[40] Ms. Coburn submits that the lump sum payment should be in the range of $231,000 and $360,000. It is argued that the award should be in the higher range because it would provide her with the necessary security and flexibility to manage her health expenses.

[41] Ms. Coburn also raises the issue that there was an error in the calculation of the pension, resulting in a retroactive amount of $33,418. This amount is being sought over and above the lump sum payment.

[42] Mr. Charlton argues that he has paid spousal support in the approximate amount of $385,000, during the last 13 years. Were it not for Ms. Coburn’s illness, the SSAG sets out a duration range of 9 to 18 years. He submits that if the Court was to accept Ms. Coburn’s proposed lump sum payout, the spousal support payment would be disproportionate to an 18-year relationship, even when one takes into account Ms. Coburn’s disability. Owing to the extraordinary amount of spousal support already paid, it is Mr. Coburn’s position that the lump sum payment should be $26,000.

[43] Alternatively, Mr. Charlton states in his written submissions that if the spousal support was to be paid for the duration of Ms. Coburn’s life expectancy, at the low range, the lump sum payment would be approximately $160,000. Mr. Charlton proposes in his alternative position that the appropriate lump sum payment should be approximately $80,000, representing half of the low range, to account for the reasonable expectation that support should be ordered below the low range when the duration extends past the SSAG recommendation.

[44] In determining the quantum of the lump sum, the Court does take into account Ms. Coburn’s medical condition but not to the extent requested by Ms. Coburn. There is no compelling evidence before the Court that her Multiple Sclerosis diagnosis is such that it should attract an amount at the higher range.

[45] Regarding the duration, Ms. Coburn’s position is that Mr. Charlton must pay her spousal support until the age of 89, being her life expectancy. With Mr. Charlton’s retirement and his limited assets, coupled with Ms. Coburn’s own financial situation which the Court does not view as precarious, the Court finds that it is not reasonable to expect that Mr. Charlton continue to pay spousal support until Ms. Coburn’s death.

[46] Having considered the parties’ oral and written submissions, the Court is of the opinion that given the unique circumstances of this case, an appropriate lump sum amount for all past and future spousal support is $125,000, payable over a five year period. At the parties’ suggestion, Mr. Martel will be engaged to deal with the issue of notional taxes or any other taxation issues that may arise as a result of the lump sum payment. If there are any disputes regarding Mr. Martel’s calculations, the parties may seek an appointment before me.

Disposition

[47] For the foregoing reasons, Mr. Charlton shall make a lump sum payment to Ms. Coburn in the amount of $125,000, subject to any adjustments to be made for taxation issues.

[48] In terms of costs, the Court is of the view that each party should bear their own costs because there was shared success in this motion. However, if a party wishes to seek costs, that party shall file and serve costs submissions, limited to three pages, excluding a Bill of Costs and Offers to Settle, within 30 days of these Reasons for Decision. The other party shall serve and file responding costs submissions, with the same page restrictions, within 30 days thereafter.

M. Smith J

Released: June 21, 2024