



COURT OF APPEAL FOR ONTARIO

CITATION:
    Nettleton v. Nettleton, 2020 ONCA 753

DATE:
    20201127

DOCKET: C66888

Feldman,
    Simmons and Harvison Young JJ.A.

BETWEEN

Arnold
    Alfred Nettleton

Applicant
    (Respondent)

and

Carol
    Ann Nettleton

Respondent
    (Appellant)

Paul Buttigieg, for the appellant

Jenna Beaton and Brigitte Barsalou,
    for the respondent

Heard: November 2, 2020 by video
    conference

On appeal from
    the order of Justice Alan P. Ingram of the Superior Court of Justice, dated
    December 17, 2018, with reasons at 2018 ONSC 7262.

Simmons
    J.A.:

Introduction

[1]

The appellant, former wife, appeals from a December
    2018 change order reducing the amount of spousal support payable to her under a
    2005 separation agreement.

[2]

The respondent, former husband, brought the
    change motion following his retirement on December 31, 2016 at age 67. Although
    the 2005 separation agreement contemplated a future variation in spousal
    support following the husbands retirement, the appellant relied on her lack of
    income and an early pension payout of $581,228.32 which the respondent received
    soon after the parties 2004 separation to resist any reduction in spousal
    support.

[3]

On the change motion, the husband relied on the
    fact that his future pension entitlement had been equalized under the parties
    separation agreement. In any event, the balance of the pension payout he had subsequently
    received is in a Locked-in Retirement Account (LIRA) from which he planned to
    begin making withdrawals at age 72.

[4]

The trial judge reduced the appellants spousal support
    from $2,750 per month to $2,181 per month commencing January 1, 2017 and to $1,009
    per month commencing January 1, 2018 based on the respondents actual income in
    those years. He also ordered the respondent to provide income tax returns to
    the appellant by June 30 each year so spousal support could be adjusted to the
    high-end amount payable under the Spousal Support Advisory Guidelines (SSAGs)
    in future years. Further, 42.2 percent of LIRA withdrawals would be included in
    the respondents income for the purpose of calculating spousal support once such
    withdrawals began.

[5]

The issues on appeal include whether the trial judge
    erred in failing to impute income to the respondent based on a $167,818 cash
    component of the pension payout the respondent received in 2009; in failing to
    impute income to the respondent immediately following his retirement based on
    the highest permissible LIRA withdrawals; and in failing to consider the
    continuing economic hardship suffered by the appellant from the marriage
    breakdown.

[6]

For the reasons that follow, I would dismiss the
    appeal.

Background

[7]

The parties were married in 1981, separated in 2004 and divorced in
    2014. They had one child born in December 1985.

[8]

In May 2005, the parties entered into a separation agreement. Under the
    terms of the separation agreement, the respondent was required to pay the
    appellant $2,750 per month on account of spousal support and $800 per month on
    account of child support based on an income of $103,860 per year. The amount
    payable for spousal support was subject to variation based on a material change
    in circumstances, whether foreseeable or not. The separation agreement also
    provided that spousal support will be varied upon the husband's retirement
    based upon the needs and financial circumstances of both parties at that time
    (the retirement adjustment clause).

[9]

In addition to spousal and child support, the separation agreement required
    the respondent to pay to the appellant two amounts on account of equalization
    of net family properties: i) $80,051 representing 50 percent of the
    respondents pension valued at $160,103 as of the date of separation using a
    projected retirement age of 63.5 years; and ii) $78,641.50 representing
    equalization of the remaining assets.

[10]

However, when the respondent was only 57 years of age, the plant
    where he worked was closed as a result of corporate restructuring, and his
    pension plan was terminated as of September 2006. He found other work within
    approximately six weeks. In 2009, he received the pension plan payout totaling
    $581,228.32. He transferred the maximum eligible amount, $419,505.44, into a LIRA
[1]
and received a cash payout for the balance, including interest, totaling
    $167,818.

[11]

The respondent's obligation to pay child support terminated as of
    December 31, 2007. Following that date, the respondent paid the appellant
    $3,464 per month ($1,600 bi-weekly) for her support. As the separation
    agreement was not amended, the appellant received $714 of the monthly payment
    tax free.

[12]

In 2014, upon reaching the age of 65, the respondent applied for
    a divorce. No changes to the existing arrangements for spousal support under
    the separation agreement were made at that time.

[13]

In mid-2016, the respondent notified the appellant he intended to
    retire at the end of the year. The parties were unable to agree on a variation
    of spousal support. Accordingly, in March 2017, the respondent reduced his monthly
    spousal support payments to $671 based on his calculations of the amount
    payable under the SSAGs, having regard to his then existing retirement income and
    the appellants income (Canada Pension Plan (CPP) and rent she received from
    renting a basement apartment in her home).

[14]

The appellant then filed the separation agreement with the court
    for the purpose of enforcement. In response, the respondent brought a change
    motion in April 2017 requesting that the spousal support payable under the
    separation agreement be reduced to $671 per month effective January 1, 2017.

[15]

In
    her response to the change motion, the appellant requested that spousal support
    continue at $2,750 per month, the amount specified in the separation agreement.
    In addition, she requested that support for the years 2014-2016 be recalculated
    based on the respondent's income in those years, yielding an order for
    retroactive support in the amount of $85,404.

[16]

The
    appellant deposed that she was 64 years of age and not in receipt of any income
    other than spousal support, CPP and limited rental income. Further, she claimed
    she had been unable to generate any employment income post-separation due to
    the marriage breakdown, age, health and lack of job opportunities at that
    time. She noted that the respondent shared accommodation with his girlfriend
    who the appellant believed earned an income in excess of $100,000 per year. Further,
    although the respondent had not disclosed his pension payout when it was received,
    his material disclosed he had a substantial fund from which he could draw
    income.

The trial judges decision

[17]

The
    change motion was heard in November 2018 and the trial judges decision was
    released in December 2018. The trial judge began the analysis section of his
    reasons by observing that two provisions in the parties separation agreement
    justified a reduction in support: the material change clause and the retirement
    adjustment clause.

[18]

The
    trial judge then turned to the question whether any of the respondents pension
    accounted for in the equalization should be used in calculating spousal
    support. Two actuaries testified regarding this issue.

[19]

In
    the trial judges view, the appellants actuary effectively imported an if and
    when clause into the separation agreement. Such a clause typically permits an
    adjustment to the pension valuation once the actual retirement date is known
    rather than basing the payment on a projected retirement date. Treating the actual
    pension payout date as a retirement, the appellants actuary concluded that only
    57.8 percent of the pension had been equalized and 42.2 percent of income could
    be used for support calculations.

[20]

However,
    the respondents actuary was critical of the appellants actuarys approach, in
    particular: his use of hindsight, which could promote litigation of separation
    agreements; and his failure to recognize that the actual date of retirement was
    67 and that the respondent would not begin to receive LIRA payments until age
    72. Taking these factors into account, the respondents actuary found 85.95
    percent of the commuted value of the pension had been equalized leaving 14.05
    percent available for support calculations.

[21]

Following
    these observations about the evidence, the trial judge moved on to the issue of
    retroactive support and declined to award it. He found that the respondent had
    more than followed the separation agreement. In this regard, he noted that
    the respondent continued to pay support during the short period he was
    unemployed; raised the quantum of spousal support when he was no longer
    required to pay child support in a manner that permitted the appellant to
    receive a tax free component; and assisted the appellant in purchasing a home
    by co-signing her mortgage and providing her with $10,000 for moving expenses.

[22]

In
    the background section of his reasons, the trial judge had observed that the
    separation agreement did not require notice of changes in income in relation to
    spousal support. The appellant provided no explanation for her delay in seeking
    an adjustment to spousal support even though she had considered doing so in
    2014 at the time of the parties divorce. Further, the trial judge found that,
    given that the respondents retirement income at the time of trial was
    approximately $36,000 per year, the respondent would suffer financial hardship
    from a retroactive order. He ordered that the effective date of any change
    order be January 1, 2017.

[23]

Turning
    to the quantum of spousal support, the trial judge noted that in the retirement
    adjustment clause the parties had agreed that variation would be based on
    needs and financial circumstances.

[24]

The
    trial judge was critical of the wife for running up debts and failing to prepare
    for the time when her support would be reduced. Nonetheless, he concluded that
    she had demonstrated a need for support. On the other hand, he found the
    respondent had made prudent financial decisions and therefore had the ability
    to pay support. He concluded that such support should be paid at the high end
    of the SSAGs.

[25]

Although
    the respondent was willing to have a notional 14.05 percent of a minimum yearly
    LIRA withdrawal ($4,377) imputed to him for spousal support calculations, the
    trial judge declined to do so. Rather, he accepted that the respondents plan
    to maximize the LIRA by holding off on withdrawals until age 72 would benefit
    both parties. However, the trial judge ruled that once the respondent started
    receiving LIRA income, 42.2 percent would be considered available for
    calculating spousal support. The trial judge gave the following reasons for
    this conclusion:

·

the retirement adjustment clause stipulated varied spousal
    support should be based on the needs and financial circumstances of both parties;

·

the appellant clearly met the test for need; and

·

in
Boston v. Boston
, 2001 SCC
    43, [2011] 2 S.C.R. 413 at para. 65, the Supreme Court of Canada concluded that
    double recovery may be permitted based on need as well as compensation.
[2]

[26]

The
    trial judge found the respondent's total income for 2017 was $57,371 (including
    final employment income from 2016) and approximately $37,300 for 2018. Based on
    these findings, the trial judge ordered that spousal support be paid as
    follows, subject to credit for amounts previously paid for the relevant
    periods:

·

commencing January 1, 2017, $2,181 per month;
    and

·

commencing January 1, 2018, $1,009 per month.

[27]

The
    trial judge further ordered that the respondent provide income tax returns and
    notices of assessment to the appellant by June 30 each year to allow for
    adjustment of spousal support using the high SSAGs figure and including 42.2 percent
    of the respondents LIRA withdrawals in income for the purpose of support
    calculations.

Discussion

[28]

In
    oral argument, the appellant focused her submissions on three alleged errors by
    the trial judge, each of which she argued constituted a material
    misapprehension of the evidence and an error of law. Underlying all of these
    submissions, however, was the premise that the parties had a 23-year, long-term,
    essentially traditional marriage and that, while the respondent enjoyed an
    economic windfall rooted in the marriage arising from the early pension payout,
    the appellant suffered, and continues to suffer, economic hardship arising from
    the breakdown of the marriage. Before turning to the appellants specific
    arguments, I set out the applicable standard of review.

(1)

Standard of Review

[29]

The
    standard of review on support issues is highly deferential. Appellate courts
    should not interfere with support orders unless the reasons "disclose an
    error in principle, a significant misapprehension of the evidence, or unless
    the award is clearly wrong":
Hickey v. Hickey
,
[1999] 2
    S.C.R. 518
, 172 DLR (4th) 577, at paras. 11-12.

(2)

Did the trial judge err by failing to take account of
    the 2009 cash
payment?

[30]

The
    appellants first argument was that the trial judge erred in failing to
    consider the whole of the evidence by failing to take account of the cash pension
    payment of $167,818 the respondent received in 2009. She inferred from his
    reasons that the trial judge accepted that only 57.8 percent of that amount was
    equalized under the parties separation agreement. Given that the respondents employment
    was terminated in 2006, he would have recognized that his pension would be
    wound up and he should have given notice of his impending change in income as required
    under the child support provisions of the separation agreement. In any event, the
    windfall early payout was rooted in the marriage.

[31]

Particularly
    in the face of the economic hardship she suffered, the appellant submits that
    the trial judge should have granted her a remedy. For example, the trial judge could
    have imputed one third of 42.2 percent of the cash pension payment to the respondent
    for each of the years 2017, 2018 and 2019. Such an approach is justified under s.
    19(1)(f) of the
Child Support Guidelines
, O.
    Reg. 391/97, (the Guidelines), which permits a court to impute income when a
    spouse has failed to disclose income when under an obligation to do so and by
    analogy to the Pattern of Income provision (s. 17(1)) of the Guidelines that
    permit the spreading of income over three years.

[32]

I
    would not accept these arguments. The trial judge was well aware of the
    $167,818 pension payout the respondent received in 2009. He noted that the
    amount netted to about $96,000 after tax and that the respondent gave evidence
    about what he had done with the money. Bottom line: at the time of trial in
    2018, the money was long gone and did not form part of the respondents current
    income.

[33]

Additionally,
    the trial judge was aware that the spousal support provisions of the separation
    agreement did not require ongoing income disclosure and that the appellant had
    not requested such disclosure. The trial judge was also aware that the respondent
    had an obligation to make financial disclosure to the appellant while he was
    under an obligation to pay child support, which ended in 2007. On our review of
    the record, there is no evidence to support a finding that the respondent knew
    what would be happening with his pension while he was still under an obligation
    to pay child support.

[34]

As
    for the appellants submissions concerning the $167,818 being largely
    unequalized and a substantial windfall rooted in the marriage, I am not
    satisfied the trial judge accepted the appellants actuarys opinion concerning
    the unequalized portion of the pension. Rather, when he adopted the 42.2
    percent future LIRA payment ratio, he acknowledged that to some extent he would
    be double dipping (in other words ordering that support be paid from a
    portion of the respondents pension that had already been equalized). The basis
    for doing so was because of the appellants need and the respondents ability
    to pay.

[35]

In
    the end, I am not satisfied that, on the facts of this case, the trial judge
    made any error in failing to reach back nine years to impose some form of
    retroactive support order to account for the fact that, in 2009, the husband had
    received a one-time cash pension payout, a significant portion of which had
    already been subject to equalization.

(3)

Did the trial judge err by misapprehending the actuarial evidence
    concerning the respondents projected LIRA income?

(4)

Did the trial judge err by failing to consider the whole of the evidence
    including the economic hardship suffered by the appellant and the tools
    available for imputing income?

[36]

The
    appellants second and third arguments are interrelated. They will therefore be
    considered together.

[37]

As
    her second argument, the appellant contends that the trial judge erred by
    failing to recognize that some of the actuarial evidence was premised on the
    respondent making only minimum annual LIRA withdrawals (or subsequently
    Registered Retirement Income Fund (RRIF) withdrawals). The appellant submits
    that the trial judge failed to recognize that the respondents access to his LIRA
    (and later his RRIF) was not limited to the minimum withdrawal amount. Rather,
    he could withdraw higher amounts annually, and do so immediately, as regulated by
    the Financial Services Commission of Ontario. As a result, the appellant
    submits that the trial judge erred by failing to recognize that the respondent
    could withdraw more than the annual minimum from his LIRA and could have
    commenced doing so as soon as he retired.

[38]

As
    her third argument, the appellant contends that, in all the circumstances of
    this case, the trial judge erred in failing to recognize it was open to him to immediately
    impute annual LIRA (or RRIF) withdrawals to the respondent. The appellant
    submits that this was necessary in order to relieve the economic hardship being
    suffered by the wife due to her lack of income, a factor that had been
    compounded by the husbands failure to give notice of the 2009 cash payment he
    received. Particularly since the respondent was sharing living expenses with a
    partner and had failed to disclose the partners income, the appellant submits
    the trial judges failure to impute a higher level of income to the respondent
    and/or to order support in excess of the high end SSAGs was not only the result
    of misapprehensions of the evidence but clearly wrong.

[39]

I
    would not accept these arguments. On my reading of his reasons, the trial judge
    was fully aware of the fact that there was a minimum withdrawal threshold for
    the LIRA once the respondent turned 72 and that it was open to him, as trial
    judge, to impute income to the respondent before the respondent began making
    LIRA or RRIF withdrawals.

[40]

The
    trial judge recognized the minimum nature of the LIRA withdrawal requirements when
    he noted at para. 53 of his reasons that the respondent will be forced to take
    out a minimum of 5 percent annually upon reaching age 72. He also implicitly acknowledged
    his ability to immediately impute income to the respondent when he declined the
    respondents suggestion that 14.05 percent of a notional annual pension income,
    calculated by the respondents actuary ($4,377), be imputed immediately. As I have
    said, the trial judge declined this suggestion because he concluded the
    respondents plan to hold off on withdrawals until age 72 would ultimately
    benefit both parties.

[41]

The
    trial judge was also well aware of the appellants dependence on the respondent
    for income and her demonstrated need for support. He said so explicitly in his
    reasons. However, he also noted that the appellant had used her equalization
    payment to purchase a house, that she still had the house at the time of trial
    and that she had taken no steps to prepare for the respondents retirement and
    resulting reduction in his income and ability to pay spousal support.

[42]

As
    a result of these circumstances, the trial judge ordered an amount for support
    premised on the respondents actual income, but at the high end of the SSAGs
    and including 42.2 percent of the respondents LIRA income to calculate spousal
    support once the respondent began receiving it. The decision to order high end
    SSAGs support recognized the long-term nature of the marriage as well as the
    appellants needs. The decision to include 42.2 percent of the respondents actual
    LIRA withdrawals in his income to calculate spousal support responded to the appellants
    economic hardship by double-dipping, at least to some extent. The decision not
    to impute LIRA income earlier or at a higher level than the respondents actual
    withdrawals reflects the trial judges overall assessment of the parties
    circumstances. I find no error in principle or misapprehension of the evidence
    in the trial judges reasons nor do I consider his order clearly wrong.

Disposition

[43]

Based
    on the foregoing reasons, I would dismiss the appeal. As agreed by the parties,
    I would make no order for costs of the appeal.

Released: K.F. November 27, 2020

Janet
    Simmons J.A.

I
    agree. K. Feldman J.A.

I
    agree. Harvison Young J.A.





[1]
Close to the date of trial, the LIRA had a value of approximately
    $570,298.98.



[2]
See
Boston
, at
    paras. 64-65. In general,
Boston
requires a court to focus on the unequalized
    portion of a payors pension when considering spousal support. However, double
    recovery can be permitted in some circumstances.


