



COURT OF APPEAL FOR ONTARIO

CITATION: McKinnon v. McKinnon, 2018 ONCA 596

DATE: 20180628

DOCKET: C63328

Rouleau, van
    Rensburg and Pardu JJ.A.

BETWEEN

Sheila Elizabeth McKinnon

Appellant/Applicant

and

Randall Lawrence McKinnon

Respondent/Respondent

Sheila McKinnon, self-represented

Randall McKinnon, self-represented

Heard: April 23, 2018

On appeal from the judgment of Justice R.T. Bennett of
    the Superior Court of Justice, dated January 3, 2017.

van Rensburg J.A.:

Introduction

[1]

This is an appeal of a final order made after a four day trial on
    a motion to change. The appeal concerns the trial judges determination of the
    respondents income for support purposes, his approach to spousal support, and
    his dismissal of the appellants motion for contempt, which
was heard together with the motion to change. For the reasons that follow I would
    allow the appeal.

Facts

[2]

The appellant Sheila McKinnon and the respondent
    Randall McKinnon were married for 28 years before they separated in 2007. Their
    separation agreement, dated April 1, 2008, provided for spousal support for Ms.
    McKinnon and child support for the youngest of their three children, who was
    born in 1994, and was 13 years old at the time. Support was based on the
    respondents annual income of $91,300 (based on a three-year average). The
    parties agreed that the appellant, who did not work outside the home, would
    take reasonable steps to achieve self-sufficiency. Both entitlement to and
    quantum of spousal support were subject to review every three years
    post-separation.

[3]

Over the years there were a number of motions,
    including three motions by the respondent to change final orders for support.

[4]

The respondent brought his first motion to
    change in 2010 seeking a reduction in child and spousal support based on a
    material change in circumstances. He had lost his job following a restructuring
    of General Motors, had then taken on other employment, and had been terminated
    from his most recent position.

[5]

By order dated September 17, 2010, after trial,
    McGee J. ordered monthly spousal support of $800 and child support of $807,
    after imputing annual income to the respondent of $91,225, and $10,000 to the
    appellant. She also ordered the respondent to maintain, until further court
    order or agreement of the parties, a life insurance policy in the face amount
    of $175,000 with the appellant as beneficiary for $100,000 and the child as
    beneficiary for $75,000. The order provided for the review of the face amount
    of the policy upon a material change in circumstances which shall include but
    not be limited to a significant change in the premiums, a change in the quantum
    of spousal support or the termination of child support.

[6]

The respondents second motion to change
    resulted in a temporary order of Hughes J. dated June 8, 2012, on consent. The
    consent order was for monthly child support of $373 and spousal support of
    $345. By final order dated October 4, 2013 Hughes J. varied her earlier order
    as of June 1, 2013 to provide for monthly child support of $479 and spousal
    support of $800, based on the respondents 2012 income of $53,008 and the
    appellants income of $10,052.16. The respondent did not seek to vary his life
    insurance obligation.

[7]

The respondent initiated a third motion to
    change in January 2015 seeking to terminate spousal and child support for the
    couples youngest son, who had been in receipt of an ODSP pension since August
    2014 (although he was still in school). Again, the respondent did not request
    an order terminating his life insurance obligation, however in March 2016 the
    appellant learned that the life insurance had been cancelled in 2015, and she brought
    a motion for contempt which was heard together with the respondents motion to
    change.

[8]

The appellant suffers from a number of serious
    health problems and receives a CPP disability pension in the amount of $10,770
    per year. Two of the parties children, aged 34 and 22 at the date of the trial,
    continued to live with the appellant. Both are disabled and in receipt of ODSP.
    The appellants only source of income, other than spousal support, is her CPP
    pension.

[9]

Three months before the trial, the respondent
    left his employment. Two months before trial he made an assignment in
    bankruptcy, and his drivers license was suspended by FRO for default on his
    support obligations.

DECISION OF THE TRIAL JUDGE

[10]

The trial judge made a final order that varied Hughes
    J.s order of October 4, 2013 to terminate child support for the youngest child
    effective July 1, 2014, and to remove the requirement to provide life insurance
    for that child. This aspect of his decision is not appealed.

[11]

As for spousal support, the trial judge found
    that the appellant was still entitled to support. As a result of her health
    issues, he concluded that it was unreasonable to impute an income greater than
    the amount she was receiving in CPP disability payments. The trial judge noted
    that the respondent apparently had no income at the date of trial, and that
    he was unable to work as a mechanic while his drivers license was suspended.
    The trial judge concluded that the respondent should have an opportunity to
    get himself on his feet so that he could gain employment and pay spousal
    support. He granted the respondents request to terminate spousal support
    starting February 1, 2015, and provided for the reinstatement of support at a
    time approximately two years later (as discussed below).

[12]

The trial judge imputed income of $35,000 per
    year to the respondent starting January 1, 2016. He noted that under the
    Spousal Support Advisory Guidelines (the SSAGs or the Guidelines) this
    amount of income together with the appellants income of $11,000 would generate
    a mid-point support amount of $805, an amount within $5 of the current spousal
    support order from 2013 (at para. 129).

[13]

After so noting, the trial judge went on to
    refer to a settlement that the parties had reached after the trial was
    concluded, but were unable to implement. The trial judge ordered monthly
    spousal support in an amount that in his view would approximate what the
    appellant would have received if the parties settlement could have been
    effected. He made an order that:

(1)

terminated spousal support effective February 1,
    2015;

(2)

required the respondent to recommence paying
    spousal support at the rate of $500 per month commencing the later of 90 days
    after his drivers license was reinstated or May 1, 2017 until April 1, 2022;
    and

(3)

fixed spousal support at $250 per month from May
    1, 2022 until April 1, 2032.

[14]

The trial judge suspended the collection of
    arrears of support accumulated pursuant to earlier court orders as of December
    31, 2015, and instead ordered that any such arrears be paid from monies the
    respondent receives from his two LIF (life income fund) accounts at the rate of
    50% of the amounts received by the respondent from those accounts until the
    arrears are paid. The respondent was required to name the appellant as
    irrevocable beneficiary of his LIF accounts, and he was prohibited from
    transferring, encumbering or otherwise dealing with the LIF accounts without
    the appellants written consent. The trial judge directed in his reasons that there
    was no requirement for ongoing financial disclosure, he stated that there was
    no intention that the respondent having an income of more or less than $35,000
    would result in a material change, and he terminated the obligation to provide
    life insurance.

[15]

The trial judge dismissed the appellants
    contempt motion. He referred to the requirement that the appellant prove that
    the respondent deliberately breached an order which was clear and unambiguous.
    Without further explanation, he stated while the court finds that the
    respondent is very close to having met those criteria, by the thinnest of
    margins, the court finds that the respondent is not in contempt of the Order
    relating to the issue of life insurance.

SPOUSAL SUPPORT

[16]

The appellant says that the trial judge erred in
    his spousal support award:

(1)

in refusing to impute to the respondent an annual income of $60,000
    from January 1, 2016 onward;

(2)

in terminating spousal support on February 1, 2015, and not
    requiring spousal support to be paid for approximately two years; and

(3)

in departing from the SSAGs in fixing spousal support.

[17]

The respondent, who did not file a factum, or
    specifically respond at the hearing to the appellants argument, simply took
    the position that the trial judge did not err in making the order he did.

[18]

Typically, support orders attract significant
    deference. This is informed by both the discretion involved in making support
    orders and the importance of finality in family law litigation. An appeal court
    should only intervene where there is a material error, a serious
    misapprehension of the evidence or an error of law, and not because the court
    would have made a different decision or balanced the relevant factors
    differently:
Hickey v. Hickey
, [1999] 2 S.C.R.
    518, at para. 12.

[19]

I would give effect to some, but not all, of the
    appellants arguments about spousal support. As I will explain, I would not
    interfere with the essentially fact-based determination of the income to be
    imputed to the respondent.

[20]

In my view, however, the trial judges decision
    to terminate support for a period of two years from February 1, 2015, and his
    departure from the Guidelines in determining the level and duration of support,
    were based on errors of law and principle, and therefore must be corrected in
    this appeal.

(1)

Imputing Income Commencing January 1, 2016

[21]

The trial judge imputed to the respondent
    $35,000 in annual income commencing January 1, 2016. The appellant asserts that
    the trial judge erred in failing to impute income of $60,000 per year, which
    she says was supported by the evidence at trial.

[22]

While the respondents qualifications as a
    licensed mechanic and his employment history may have justified imputing a
    higher annual income to the respondent, I see no basis on which to interfere
    with the trial judges factual and discretionary decision. In arriving at the
    figure of $35,000, the trial judge considered the relevant factors of the
    respondents qualifications, his age (60), his employment history (including
    his periods of unemployment and unemployment at the date of trial), and his relatively
    good health, that his best earning opportunity was as an auto mechanic, and
    the income actually generated by his most recent period of employment as an
    auto mechanic. Furthermore, as explained below, an income of $35,000 is close
    to the amount the respondent was able to earn from employment in 2015. As such,
    I would not interfere with the motion judges imputation of annual income to
    the respondent, commencing January 1, 2016, of $35,000.

(2)

Spousal Support from February 2015 Onward: 
    Unjustified Departure from the SSAGs

[23]

The appellant argues that the trial judge erred
    when he (1) terminated the respondents support obligation for two years
    commencing February 1, 2015; and (2) awarded spousal support going forward at a
    level significantly less than what is recommended under the SSAGs.

[24]

I agree. In my view, both decisions  to give
    the respondent a two year support holiday, and to award future support below
    the level recommended by the SSAGs  constitute unjustified departures from the
    SSAGs and therefore errors. The SSAGs are the presumptive starting point for
    awarding support.  Any departure from them requires adequate explanation:
Slongo
    v. Slongo
, 2017 ONCA 272 at paras. 105 and 106.

[25]

The trial judge terminated the respondents obligation
    to pay support effective February 1, 2015, and only restarted the obligation on
    the earlier of 90 days after the respondents drivers license was reinstated
    or May 1, 2017. Because the trial judges reasons were released on January 3,
    2017, this effectively gave the respondent a support holiday of between 23 and
    27 months.

[26]

The trial judge did not explain why he made an
    order terminating spousal support for a two-year period. He adverted to the
    need for the respondent to get himself on his feet. And he referred on a
    number of occasions to FROs suspension of the respondents drivers license,
    as a reason the respondent could not work as a mechanic, and as a consequence
    of the appellants refusal to consent to the termination of child support. Specifically,
    he referred to the appellants relentless pursuit of support as causing the respondent
    to lose his drivers license and consequently the ability to work in his trade.
    Even if the trial judges criticism of the appellant for refusing to voluntarily
    terminate child support was warranted (and I do not necessarily agree, given
    the evidence that the appellant in 2015 sought leave to bring a motion which
    was denied, to terminate child support and to increase spousal support), this
    could not reasonably justify the complete elimination of the respondents
spousal
support obligation for a period of two years.

[27]

It was, accordingly, in my view an error to
    interrupt the spousal support obligation.

[28]

It was also, in my view, an error to depart from
    the SSAGs in the amount of support ordered on a go-forward basis. In so doing,
    the trial judges reasons suggest that he was guided by the parties mediated
    settlement. The parties, at the conclusion of the trial, but before a decision
    was released, had reached a settlement at a mediation. The terms of the
    settlement (which are set out in the trial judges reasons) provided for, among
    other things, spousal support to terminate effective February 1, 2015, and for
    the respondent to transfer the balance in his LIF accounts ($67,708.14) to the
    appellant. The settlement could not be implemented when it was determined that there
    was a legal impediment to the transfer. Despite the trial judges explicit
    statement, at para. 13 of his reasons, that the court would render its decision
    based on the evidence heard at trial, he also stated, at para. 132, that it
    was appropriate to craft a decision that incorporates as much as possible the
    spirit of the settlement reached by [the] parties and, at para. 142, described
    as the net effect of his decision that the appellant would receive
    approximately the same as she would have received if the parties settlement
    could have been effected. The settlement however required the immediate
    payment of a lump sum to the appellant in exchange for a release of the
    respondents obligations, and, as the appellant points out, the lump sum
    settlement was a compromise intended to bring finality to the litigation.

[29]

It was an error for the trial judge to use the
    parties negotiated settlement as a reference point for determining spousal
    support.

[30]

Offers to settle are inadmissible in subsequent
    family law proceedings except when dealing with costs issues: see rule 18(8) of
    the
Family Law Rules
, O. Reg. 114/99. The same
    applies to draft minutes of settlement tendered on another party but not
    signed:
Parreira v. Parreira
, 2013 ONSC 6595. This
    rationale extends to a settlement that was agreed upon but could not be
    implemented. The trial judge here ought to have made his decision based on the
    evidence he heard. In any event, the terms of the unimplemented settlement
    agreement could not justify a departure from the SSAGs in the determination of
    the respondents spousal support obligations, and was not a reason for interrupting
    spousal support for two years, and then fixing support at a level below the
    recommended SSAGs range.

(3)

Applying the SSAGs to This Case

[31]

Having concluded that the trial judge erred in principle in his
    determination of spousal support from February 1, 2015 onward, this court may
    make any order that the court below should have made, provided that the record
    permits us to do so.
The termination of the
    respondents obligation to pay child support warrants reconsideration of the
    amount of spousal support payable according to the SSAGs and is expressly
    contemplated by those guidelines.

[32]

The respondent sought to reduce his support
    obligations commencing February 1, 2015. His support obligations until that
    time were governed by Hughes J.s October 4, 2013 order, which required him to
    pay spousal support of $800 per month and child support of $479, based on his
    annual income in 2012 of $53,008. The respondents income in the next two years
    was relatively consistent: the trial judge determined that he earned $51,101.10
    in 2013 and $56,287 in 2014. He did not determine the respondents income for
    support purposes for 2015 although he discussed the respondents financial
    circumstances and observed that a significant portion of the respondents total
    income for that year was comprised of withdrawals from his retirement savings. The
    respondents line 150 income for 2015 was $104,246.45, of which $70,025.51
    consisted of RRSP withdrawals and RRIF or LIF annuity payments.

[33]

For the period starting February 1, 2015, I
    would fix spousal support at the mid-point of the suggested SSAGs amount based
    on the parties respective incomes for 2015, but excluding the respondents
    encroachment on retirement savings in that year. The respondents other income
    (employment income, commissions and employment insurance) for 2015 was $39,371.09.
    Based on that income amount and the appellants income of $11,000 per year, I
    would order a mid-point spousal support amount of $1,034 per month.

[34]

As for spousal support going forward, I have already
    concluded that the trial judge did not err in imputing an income of $35,000 to
    the respondent commencing January 1, 2016. There is no reason to depart from
    the mid-point spousal support amount suggested by the SSAGs. Accordingly, after
    taking into consideration the appellants CPP benefits of $11,000, she is
    entitled to spousal support from January 1, 2016 forward in the sum of $875 per
    month.

CONTEMPT


[35]

The trial judge offered no reason for refusing
    to find the respondent in contempt of the McGee J. order requiring him to
    provide life insurance for his support obligations. He acknowledged that, in
    order to be found in contempt, the respondent must have deliberately breached
    an order that was clear and unambiguous, but then simply stated that while the
    court finds the respondent is very close to having met those criteria, by the
    thinnest of marginsthe respondent is not in contempt of the order relating to
    the issue of life insurance.

[36]

Civil contempt requires that the moving party
    establish beyond a reasonable doubt that (a) the order alleged to have been
    breached states clearly and unequivocally what should or should not be done;
    (b) the alleged contemnor had actual knowledge of the orders terms; (c) the
    alleged contemnor intentionally did the act the order prohibited or
    intentionally failed to do the act the order required. A judge retains an
    overriding discretion to decline to make a contempt finding where the foregoing
    factors are met where it would be unjust to do so, such as where the alleged
    contemnor has acted in good faith to take reasonable steps to comply with the
    relevant court order:
Carey v. Laiken
, [2015]
    2 S.C.R. 79, at paras. 33-35, 37. The trial judges reasons on the contempt
    issue are conclusory. He does not explain why he concluded that contempt had
    not been made out and, on a review of the evidence, there was no valid reason
    to refuse a contempt order in this case.

[37]

First, the McGee J. order was clear and
    unambiguous  the respondent was required to maintain a life insurance policy
    for $175,000 pending agreement by the parties or court order. Second, the
    respondent admitted that he knew about the order, and his ongoing obligation to
    maintain life insurance, pending court order or the appellants agreement, and
    that he had been found in contempt for the same breach in 2010. Third, the
    respondents breach of the order was deliberate. He did not simply allow the
    policy to lapse; there was no inadvertence. He admitted to having written a
    letter to the insurance company in June 2015, to cancel the policy. The
    respondent did not advise the appellant that he was cancelling the policy nor
    did he seek her consent or a court order permitting him to do so. His
    explanation at trial was that he could not afford the premiums. However, at the
    time he cancelled the policy (which he agreed in his evidence at trial had a
    premium of around $135 per month), he had acquired a new truck and was making
    loan payments of $600, and total vehicle payments of $1,100 per month.

[38]

I would therefore allow the appeal of the trial
    judges dismissal of the contempt motion and find that the cancellation of the
    respondents life insurance policy in June 2015 and the continued failure to
    have in place the life insurance required by the order of McGee J. dated September
    17, 2010 until that obligation was lawfully terminated, was in contempt of that
    order.

[39]

The appellant asks this court to impose the
    penalty she requested at trial, namely a $5,000 fine to be paid to her
    directly. Rule 31(5) of the
Family Law Rules
provides for a variety of orders that may be made where a person is found in
    contempt, including (c) that the person in contempt pay an amount to a party as
    a penalty.

[40]

In my view, the appropriate penalty is to
    require the respondent to pay to the appellant the sum of $2,295. This is the total
    amount of the monthly premiums the respondent avoided paying from when he cancelled
    the insurance in June 2015 for the next 17 months, and before the insurance
    obligation was terminated by the trial judge. This amount is payable as spousal
    support, as the intention was for the life insurance policy to provide security
    for the respondents support obligations.

[41]

In addition to terminating the life insurance
    obligation, the trial judge required the respondent to name the appellant as
    irrevocable beneficiary of his LIF accounts, and prohibited him from
    transferring, encumbering or otherwise dealing with the LIF accounts without
    the appellants written consent. It is clear that this obligation was intended
    to replace the life insurance obligation, to provide a source for payment of
    monies to the appellant in the event of the respondents death. There is no
    reason to interfere with these terms of the order, which will remain in place.

DISPOSITION

[42]

The appeal is therefore allowed. Paragraphs 2, 6, 7, 8, 10, 11 and
    14 of the January 3, 2017 order of Bennett J. are set aside.

[43]

Commencing February 1, 2015 until December 1, 2015, the respondents
    spousal support obligation is $1,034 per month. Commencing January 1, 2016 the
    respondents spousal support obligation is $875 per month.

[44]

With
respect to arrears of support, the FRO statement of arrears shows arrears of child and spousal support as of January 1, 2016 in the sum of $8,215.74. With the termination of child support by Bennett J. effective July 1, 2014, and the adjustments under this order, the arrears of support as of January 1, 2016 are $2,977.76. The total arrears therefore owing from January 1, 2016 until July 1, 2018 (based on $875/month in monthly support for 30 months, namely, $26,250, plus the $2,295 contempt penalty, plus the $2,977.76 owing up until January 1, 2016) is $31,522.76, less amounts already paid between January 1, 2016 and July 1, 2018.  The arrears are to be paid by the respondent in accordance with para. 9 of Bennett J.'s order, which specifies that arrears are to be paid from his LIF accounts at the rate of 50% of the amounts received by the respondent from those accounts until the arrears are paid.

[45]

The
    parties are to provide one another with copies of their T1 general returns by
    May 31 each year and their notices of assessment within 30 days of receipt,
    except that the T1 general returns for 2017 and notices of assessment shall be
    exchanged within 30 days of this order. A support deduction order shall issue
    in respect of amounts payable commencing July 1, 2018.

[46]

Costs,
    inclusive of disbursements and applicable taxes, are payable by the respondent
    to the appellant in the sum of $5,000 for the trial and $3,000 for the appeal.

Released: KvR June 28, 2018

K. van Rensburg J.A

I agree Paul Rouleau
    J.A.

I agree G. Pardu
    J.A.


