Claims for Retroactive Child Support and Spousal Support

Speaking of the recently concluded National Family Law Program (see the post below), I was fortunate enough to be asked to present a paper at the conference reviewing the case law on retroactive child support and spousal support. Since my paper is too dull to hold any reasonable person's attention for more than twenty seconds, I'll just give you the Coles Notes version.

The two really important cases on this subject are D.B.S. v. S.R.G., a 2006 decision of the Supreme Court of Canada on retroactive child support, and Kerr v. Baranow, a 2011 decision of the court which addresses retroactive spousal support. A "retroactive" order is an order that has a start date before the date the order is made, like an order made in July for child support payments beginning in March.

The key points of the court's analysis in D.B.S. are these:

• An obligation to pay child support exists independent of any order or agreement on child support.
• The amount of child support is determined by the Child Support Guidelines. The Guidelines base the amount of support owing on the income of the payor. 
• The payor's child support obligation is the amount payable based on the payor's income and the Guidelines, but changes as the payor's income fluctuates.
• An order or agreement may correctly state the amount of child support payable when the order or agreement is made, but if the payor's income changes the order or agreement stop being correct.
• When an order or agreement is no longer correct, a court can make an order requiring the payor to make up the difference between the amount of child support that was paid and the amount that should have been paid.

D.B.S. then says that four factors should be taken into account when a court is asked to make a retroactive order:

1. the reasons for the recipient's delay in asking for an order updating the amount of child support;
2. any misconduct on the part of the payor, such as hiding income, lying about income or pressuring the recipient not to ask for more support;
3. any hardship suffered by the children as a result of the payor's short support payments; and,
4. any hardship that the payor might suffer if forced to pay a retroactive child support order.

Courts should consider these factors and the facts of each case in a "holistic" manner.

When a court is prepared to make a retroactive child support order, the start date of the order should be the date the recipient let the payor know that child support needed to be updated, to a maximum of three years from the date of the recipient's application to court. However, if the payor has engaged in misconduct of some sort, then the start date can be as long ago as the date when the payor's income changed.

In Kerr, the court held that these same considerations also apply to claims for retroactive spousal support, with two modifications. First, the reasons for the recipient's delay are more important in claims for spousal support than in claims for child support. Second, the sort of misconduct that is relevant is misconduct relating to the support application itself.

After reviewing how Canada's courts of appeal have treated D.B.S. and Kerr, it seemed to me that orders and agreements for child support no longer offer blanket security against claims made in respect of the period covered by the order or agreement. Payors of spousal support are somewhat better off, subject to the propriety of their behaviour and the adequacy of their disclosure, but the period elapsing between separation and the first payment of support seems to be fair game. It also occurred to me that the issue of misconduct has become the dominant factor in deciding claims for retroactive support orders, despite the court's caution that it is only one of the four factors to take into account and that none of the factors are predominant.

At the end of the day, I concluded that the only reasonable court of action for people paying support, child support in particular, is to make voluntary disclosure of any changes in income and to update the amount of child support being paid whether the recipient asks for the change or not.

Tax Court Rules on Deductibility of Legal Fees to Claim or Enforce Support

Ron Hooge, a respected Vancouver chartered accountant and business valuator with SmytheRatcliffe, has distributed a commentary on a recent Tax Court case, Sarophim v. Her Majesty the Queen, concerning the tax deductibility of legal fees incurred in relation to support payments to be made following separation.

The basic rule, as I had understood it, is that legal fees incurred to obtain or enforce a spousal or child support entitlement are tax deductible whereas legal fees incurred to defend a support claim are not. The taxpayer in Sarophim argued that this distinction was unconstitutional.

As Ron says in his commentary, the taxpayer lost:

"The Court found that it is now settled law that legal fees incurred by the payer of support (for example, to establish or increase, or decrease or terminate it) cannot be considered to have incurred for the purpose of earning income, and therefore not deductible. The Court referenced Interpretation Bulletin, IT-99R5, paragraph 21. 

"Except where there is a specific provision in the [Income Tax Act] dealing with legal or accounting fees, legal and accounting fees are deductible only to the extent that they 

a) are incurred for the purpose of gaining or producing income from business or property, and 

b) are not outlays of a capital nature."

Ron then quotes paragraphs 17 to 21 of the Interpretation Bulletin, which are indeed worth the effort to read if you can make it through the heavy legal prose. What the Interpretation Bulletin says is this:

1. Legal fees incurred to establish a right to spousal support are not deductible.
2. Legal fees incurred to establish a right to child support are deductible.
3. Legal fees incurred to obtain an increase in the amount of child support or spousal support paid are not deductible.
4. Legal fees incurred to enforce a right to child support or spousal support established in an order or agreement are deductible.

My thanks to Ron for his commentary and to Megan Ellis, QC for bringing it to my attention. My extra thanks to Kathleen Packard for helping me find and correct an error in this post.

New Legislation Will End Limitation Period for Claims on Arrears of Support

The provincial government today introduced new legislation to replace the Limitation Act. The proposed legislation, Bill 34, will tidy up a lot of the complexities of the current act and, along the way, repeal the limitation period presently governing actions for the enforcement of arrears of child support and spousal support.

Under ss. 3(1) and 46 of the new legislation, no limitation will apply to claims for arrears accumulating under a court order, or under an agreement filed in court pursuant to ss. 121 or 122 of the Family Relations Act or ss. 148 or 163 of the Family Law Act; once arrears have accumulated, they can always be enforced. Payors beware!

Supreme Court of Canada Releases Decisions on Spousal Support

The Supreme Court of Canada has just released a brace of decisions on the variation of spousal support orders in L.M.P. v. L.S. and R.P. v. R.C. L.M.P. is the primary decision, and R.P. applies the reasoning in L.M.P. in different circumstances.

In L.M.P., the wife was diagnosed with multiple sclerosis following the parties' marriage, stopped work and began to receive disability benefits. The parties separated after fourteen years of marriage and a year later, in 2003, signed a separation agreement under which the husband would pay spousal support to the wife, in an amount increasing with the cost of living and without an end date. The agreement was later incorporated into a court order. In 2007, the wife applied for an increase in child support thereby giving the husband the opportunity to apply to terminate his spousal support obligation.

At trial, the husband argued that the wife was capable of working and should work, and the issue was argued vigorously with expert evidence being led by both sides. The husband did not argue that the wife's ability to work was a change in circumstances from the separation agreement, however, nor did the trial judge make such a finding. At the end, the judge concluded that the wife was able to work and made an order reducing the wife's spousal support payments accordingly.

On appeal, the wife argued that the trial judge made a mistake in changing the amount of her support payments without find that there had been a change in circumstances. After s. 17(4.1) of the Divorce Act says this:

"Before the court makes a variation order in respect of a spousal support order, the court shall satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order or the last variation order made in respect of that order, and, in making the variation order, the court shall take that change into consideration."

The Quebec Court of Appeal held that the although the trial judge didn't expressly mention the change in circumstances, her approach satisfied the requirements of s. 17. However, the court also said that held that the passage of time, accompanied by a failure to become self-sufficient can give rise to the required change of circumstances, and that the absence of a time limitation in the support agreement incorporated into the order could not relieve the payee of her obligation to become self-sufficient; I suspect that this is what lead the Supreme Court of Canada to want to hear the wife's further appeal.

The Supreme Court of Canada disagreed with both the trial judge and the Court of Appeal. Here are the highlights of the majority decision.

"[23] ... there are differences between what a court is directed to consider in making an initial support order and on a variation of that order.  Notably, unlike on an initial application for spousal support under s. 15.2(4)(c), which specifically directs that a court consider 'any order, agreement or arrangement relating to support of either spouse', s. 17(4.1) makes no reference to agreements and simply requires that a court be satisfied 'that a change in the condition, means, needs or other circumstances of either former spouse has occurred' since the making of the prior order or the last variation of that order.  Because of these differences in language, it is important to keep the s. 15.2 and s. 17 analyses distinct.

"[24] On an application under section 15.2, the court is expressly concerned with the extent to which the terms of an existing agreement should be incorporated into a first court order for support.  On an application under s. 17, on the other hand, the court must determine whether to vary or rescind that support order because of a change in the parties’ circumstances. ...

"[29] In determining whether the conditions for variation exist, the threshold that must be met before a court may vary a prior spousal support order is articulated in s. 17(4.1).  A court must consider whether there has been a change in the conditions, means, needs or other circumstances of either former spouse since the making of the spousal support order. ...

"[34] The decisions in Willick and G. (L.) also make it clear that what amounts to a material change will depend on the actual circumstances of the parties at the time of the order.

"[35] In general, a material change must have some degree of continuity, and not merely be a temporary set of circumstances ...  Certain other factors can assist a court in determining whether a particular change is material.  The subsequent conduct of the parties, for example, may provide indications as to whether they considered a particular change to be material ...

"[46] The examination of the change in circumstances is exactly the same for an order that does not incorporate a prior spousal support agreement as for one that does.  A general statement that the agreement must be accorded 'significant weight', even though its implications in a concrete case are unclear, in effect raises the threshold necessary to establish a 'material change' under s. 17 when there is an agreement, and emphasizes legal certainty and finality at the expense of the statutory requirements of s. 17. ..."

You can probably guess where this is going. Whether a spousal support obligation is set out in an order or an agreement, to vary the obligation you first must establish that a material change in circumstances has occurred since the order or agreement was made. The nature of the required change varies from couple to couple, but in general the change must be significant and long-lasting.

Applying this test to the facts, the court held that the order ought not have been changed:

"[56] ... instead of determining whether there had been a material change of circumstances, the trial judge conducted a de novo assessment of the wife’s ability to work as if this were an original application for support under s. 15.2. In relying on this assessment to infer a material change of circumstances, the Court of Appeal fell into the same error.

"[57] The husband argued that the wife had a duty to seek employment based on the factors in s. 15.2(6) of the Divorce Act which were included in the agreement incorporated in the order.  In particular, he relied on the objective that 'insofar as practical' there should be 'economic self-sufficiency of Plaintiff and Defendant'.  Her failure to seek employment, he therefore argued, was a material change of circumstances.

"[58] We do not accept the husband’s submissions.  There is nothing in the order suggesting that the wife was expected to seek employment.  The order recognized that the wife was in receipt of disability payments.  It provided for spousal support and included no term or provision for review.  Its terms indicate that spousal support was intended to be for an indeterminate period.  The order expressly acknowledged that the objectives of s. 15.2(6) of the Divorce Act were taken into consideration by the parties.

"[59] Neither does the Divorce Act impose a duty upon ex-spouses to become self-sufficient.  As this Court affirmed in Leskun, the '[f]ailure to achieve self-sufficiency is not breach of ‘a duty’ and is simply one factor amongst others to be taken into account' (para. 27).  Section 15.2(6)(d) of the Divorce Act simply states that the order should 'in so far as practicable, promote the economic self-sufficiency' of the parties."

Supreme Court judgments are rarely as clearly written. In essence, in the majority decision the court has digested the settled law on spousal support but clarified some lingering uncertainty as to whether the test on a variation under s. 17 is the same as the test for an original support order under s. 15.2, and emphasized the critical need to establish a material change when applying to vary an order. If a payor wishes to get out of a support obligation, he should ensure that the original agreement:

1. has a termination date or at least spells out the circumstances upon which the recipient's entitlement will end;
2. has a review date or at least sets the circumstances under which a review will be held; or,
3. requires the recipient to become financially independent.

Using its reasoning in L.M.P., the court concluded that the husband in R.P., another case from the Quebec Court of Appeal, had also failed to establish a change in circumstances justifying the termination of his spousal support obligation. In R.P., however, the change relied on was a change in the husband's financial circumstances.

Summarizing L.M.P., the majority said that:

"[25] Under s. 17(4.1) of the Divorce Act, the moving party must establish that there has been a material change of circumstances since the making of the prior order or variation.  The applicable framework for this case is the one elaborated in the companion decision, L.M.P. To be material, a change must be one which, if known at the time, would likely have resulted in different terms to the existing order.  On an application to vary, the court should consider the terms of the order and the circumstances of the parties at the time the order was made to determine whether a particular change is material.  The existing order is deemed to have been correct and only if the requirements of s. 17 of the Divorce Act are met will there be a variation."

Fair enough. Turning to the nature of the claimed change in circumstances:

"[30] Under s. 17(4.1) of the Divorce Act the husband, as the applicant, had the burden of establishing that there has been a material change in his circumstances since those existing at the time of the 1991 Order.  His argument that as of 2008 he was no longer able to pay support is an insufficient basis to support a finding of material change.

"[31] The record before this Court contains no evidence as to the husband’s financial circumstances at the time of the 1991 Order.  During those proceedings, he challenged the wife’s entitlement to support, not his capacity to pay the amounts she claimed.  Neither the reasons of the courts in those earlier proceedings, nor the record before this Court, contain information as to the husband’s then financial circumstances. ...

"[33] There are two crucial evidentiary gaps, however, in the husband’s financial circumstances. ... These gaps mean that we cannot assess how the husband’s economic circumstances compared to those in 1991. There is therefore no way of measuring whether there is any material change that would entitle him to a variation of spousal support."

Ouch. Without the evidence of the husband's financial circumstances then and now, there would be no way to measure whether the requisite change in circumstances had occurred or not, or if it had occurred, then to gauge the profundity of the change.

"[45] Here the husband could have led evidence capable of establishing his financial circumstances in 1991, but despite the clear requirements of the Divorce Act ... chose not to do so at trial, and failed to provide any explanation for his failure to do so. Absent some adequate explanation as to why no evidence has been adduced with respect to a party’s circumstances at the time of the order, no inference that a material change of circumstances has occurred is available."

At the end of the day, I'm not sure that either of these cases contribute much of any importance to the law on the variation of spousal support orders, at least not to the law as we know it in British Columbia. It may be that the courts of Quebec had lost their way somewhat — the Divorce Act is interpreted with a significant amount of regional variation across Canada — and needed to be put back on track.

Whether I'm right about the significance of these decisions or not, the judgment in L.M.P. is extremely helpful for its tidy synthesis and knitting-together of the important Supreme Court decisions on spousal support since 1994. Anyone who wishes to learn about the law on spousal support in Canada should start with Miglin v. Miglin and conclude with L.M.P.

Supreme Court Releases Important Decision on Lump Sum Spoual Support

The Supreme Court has just released its judgment in Robinson v. Robinson, a case in which the parties had resolved everything on their own except for how spousal support should be paid and how much should be paid. The husband's liability to pay spousal support was admitted, however the wife wanted to receive spousal support in one large payment (a lump sup) or as a mix of monthly payments (periodic payments) and a lump sum; the husband preferred to meet his obligation by way of periodic payments.

Under s. 15.2(1) of the Divorce Act, the court may "make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable." The Family Relations Act says almost the same thing at s. 93(5).

Periodic payments are the most common form of spousal support. Periodic payments allow the payor and the recipient to make stable financial plans, and have the benefit of being tax-deductible for the payor. Periodic payments are also usually more affordable for the payor since few people have the cash lying around to make a large lump sum payment.

On the other hand, lump sum payments are attractive to payors who want to have done with their obligation and don't relish the thought of cutting a cheque each month to someone they're no longer very fond of. Recipients sometimes like the idea of a lump sum payment if the money will allow them to invest in a business or pay for education that will help them get back on their feet. Although lump sum payments aren't tax-deductible for payors, they're also not taxable income for recipients.

In the case of the Robinson family, by the time the case came to trial the husband was in his fifties, with a good income in the low six figures and living overseas with his new partner, and in recent years had suffered a number of heart attacks and a stroke requiring hospitalization. Quoting from the judgment, the wife sought a lump sum for the following reasons:

"[81] The wife is now [in her fifties]. She is unable to become and remain economically independent and self-sufficient without ongoing financial assistance from the husband. She seeks an order that the husband pay ongoing spousal support for an indefinite period. However, because of his past behaviour, and in order to terminate all contact with the husband, she seeks an order that the spousal support be paid in a lump sum.

"[82] The wife submits that both parties would benefit from a clean break, since they continue to have a difficult, stormy relationship and poor communication, which has not improved after many years. ...

"[83] She cites a number of other incidents of miscommunication and discord between the parties regarding financial matters, including: the withdrawal of funds from the parties’ joint account; the concern over the payment of ___ funds; and the situation regarding the purchase of the ___ condominium.

"[84] It is the submission of the wife that as the relationship between the parties has been strained since 20__ and became increasingly more difficult until the separation in 20__, and since the communication between the parties remains minimal and difficult, the clean break afforded by a lump sum payment is the appropriate form of spousal support in her circumstances.

"[85] The wife deposes that the wait each month to see whether funds will be forthcoming exacerbates her [illness], and she believes the stress and anxiety have a negative impact on her [illness]. A lump sum will alleviate this concern."

The husband sought to pay on a periodic basis and said that a lump sum would be inappropriate for these reasons:

"[88] The husband submits that periodic payments of spousal support are appropriate in these circumstances since a lump sum payment is made only in exceptional circumstances.

"[89] ... The husband is aware of no medical condition which would preclude the wife from taking employment, either in the past or currently. She has means, including her ability to earn income. The husband has consistently encouraged the wife to take either course work or find employment, but she has refused to do so.

"[90] On the basis of the circumstances of this case and the case law submitted, the husband submits that the wife should use her capital to generate income, as that capital is already available as a result of a reapportionment of the family assets. Means includes the ability to earn an income both personally and from one’s capital.

"[91] This is not a case where the husband can make back the capital [which a lump sum payment would require him to spend], since his income is now reduced from previous years’ income. ... She does not have a one-time need for additional capital.

"[92] Enforceability is not an issue in this matter, as the husband has an excellent record of [paying] spousal support."

The trial judge began her analysis by quoting from an appeal case out of Ontario released earlier this year, Davis v. Crawford (I've put the important bits in bold):

"[66] Most importantly, a court considering an award of lump sum spousal support must weigh the perceived advantages of making a lump sum award in the particular case against any presenting disadvantages of making such an order.

"[67] The advantages of making such an award will be highly variable and case-specific. They can include but are not limited to: terminating ongoing contact or ties between the spouses for any number of reasons (for example: short-term marriage; domestic violence; second marriage with no children, etc.); providing capital to meet an immediate need on the part of a dependant spouse; ensuring adequate support will be paid in circumstances where there is a real risk of non-payment of periodic support, a lack of proper financial disclosure or where the payor has the ability to pay lump sum but not periodic support; and satisfying immediately an award of retroactive spousal support.

"[68] Similarly, the disadvantages of such an award can include: the real possibility that the means and needs of the parties will change over time, leading to the need for a variation; the fact that the parties will be effectively deprived of the right to apply for a variation of the lump sum award; and the difficulties inherent in calculating an appropriate award of lump sum spousal support where lump sum support is awarded in place of ongoing indefinite periodic support.

"[69] In the end, it is for the presiding judge to consider the factors relevant to making a spousal support award on the facts of the particular case and to exercise his or her discretion in determining whether a lump sum award is appropriate and the appropriate quantum of such an award."

Considering these factors, the judge concluded that the wife should receive the lump sum she sought: "lump sum spousal support will assist the wife to be self-sufficient and meet her needs to maintain her standard of living with use of the capital from the lump sum together with the capital achieved in the division and reapportionment of the family assets " and "the advantages of a clean break outweigh the minimal tax benefit of periodic payments in addition to a lump sum."

The question then turned to the calculation of amount, one of the main problems with lump sum orders identified in the Davis decision. After restating the relevant provisions of the Spousal Support Advisory Guidelines (ss. 3.4.2, 7.1, 10.1 and 10.2), the court reviewed a number of of the more important cases on the subject. Again quoting from the judgment:

• As stated in Smith v. Smith [a 2006 case of the B.C. Supreme Court] ... "the present value of a periodic support stream in favour of Mr. Smith until Ms. Huntley attains age 65 would approximate $105,000, $123,000 and $140,000 at the low, mid and high points, respectively, of the range suggested by the draft guidelines. Allowing for income tax at an average rate of 30%, the after-tax present value amounts would approximate $70,000, $82,000 and $93,000, respectively. The reapportionment I have ordered, based as it was on markedly different income-earning capacity, accounts for approximately $50,000 of the present value of the future support stream."
• In Wilson v. Wilson ... a 1997 decision of the B.C. Court of Appeal, the lump sum award was in an amount "equal to the present value" of the monthly payment.
• In the case of Raymond v. Raymond ... decided by the Ontario Superior Court of Justice in 2008, the calculation of lump sum spousal support took into account the net amount of the mid-range figure from the SSAG, less 6% to represent the present value of the lump sum payment, and less 50% to take into account future contingencies.
• In Durakovic v. Durakovic, ... also a 2008 decision of the Ontario Superior Court of Justice, the lump sum entitlement was calculated by using a monthly figure extrapolated for the number of months remaining in entitlement, less 30% for income tax payable, less 3% for present value, less 25% for negative contingencies which was noted to be "lower than other cases as there are only two years left to run on the calculation of the lump sum."

To summarize, then, in calculating a lump sum amount, the court can take into account:

1. the ranges proposed by the Spousal Support Advisory Guidelines formulas;
2. the tax consequences periodic payments would have attracted (a deduction to account for the tax the recipient would have owed on periodic payments);
3. the decreasing value of the dollar over time (another deduction); and,
   
4. the possibility of future changes which would have reduced the amount of the periodic payment (another deduction).
   

Applying these factors to a very learned understanding of the fine details of the Advisory Guidelines (and, I believe, her own calculations), the judge concluded:

"[123] An appropriate amount of monthly support is a starting point in the calculation of the lump sum.

"[124] With income of the wife of ___, support payable for 9 and one-half years, and the husbands’ accurate income and age of ___, the SSAG range of monthly payments provided by the computer application is $5,156, low, $6,016, mid, and $6,875, high.

"[125] The Without Child Support Formula ... provides for a range from 1.5% to 2% of the difference between the spouses’ gross incomes for each year of marriage up to a maximum of 50%. Taking 1.5% to 2% of the income difference results in a range of $5,755 to $7,633.

"[126] However, the maximum under the Formula is 50% of the income difference, which is $6,851.

"[127] Taking into account the Formula and the maximum, and the computer application of the Formula, the range is $5,156 to $6,851 per month. Taking into account the totality of the circumstances, I would determine monthly spousal support at the mid-point of this range or $6,000 per month as a starting point for calculation of the lump sum.

"[128] The lump sum calculations provided by the computer application of the Formula do not provide an appropriate result in this case where there is a restructuring of support ... to arrive at a lump sum. This is an example of an exception ... where the 'formula outcomes, even after consideration of restructuring, will not generate results consistent with the support objectives and factors under the Divorce Act.' ... [The] computer applications provide a reference point but an award that meets the requirements of the Divorce Act and Family Relations Act requires another method of calculation.

"[129] I prefer the method illustrated by the cases of Wilson, Durakovic, Raymond, and Smith, which take into account in various manners the factors of relative tax situations, an appropriate discount rate for the present value, and a contingency rate where necessary. In this case where the health of the payor spouse is subject to a heart condition which has required quadruple bypass surgery and continues to require medication, a significant contingency adjustment is required as there is a real possibility that the husband will not be able to continue to work until his planned retirement date.

"[130] There are 9 and one-half years or 114 months remaining for the payment of spousal support from December 2011, for a total of $684,000. From this gross amount, I would deduct tax which would be payable by the wife at an assumed rate of 35%. The discount rate for present value is 7%. To that amount I apply a contingency discount of 20%. The net amount is $330,782.

"[131] I find that the wife is entitled to lump sum spousal support in the amount of $330,000."

I expect this will be required reading for some time for cases involving not just the payment of spousal support as a lump sum, but the calculation of the lump sum when such an order is made.

I also appreciate and ask readers to note the judge's careful reading of the Advisory Guidelines. The Advisory Guidelines is very detailed and offers a nuanced range of exceptions and restructuring opportunities intended to help the formulas adapt to better suit complicated and unusual situations; too often lawyers overlook that deeper analysis and churn out calculations that don't consider these other options.

DivorceMate Provides Free Advisory Guidelines Calculator

In April 2011, DivorceMate, one of Canada's major publishers of spousal support and child support software, published a new website, www.mysupportcalculator.ca. The website advertises lawyers and law firms, performs child support calculations under the Child Support Guidelines and, most importantly, performs spousal support calculations using the Spousal Support Advisory Guidelines formulas.

Although the spousal support calculators available at mysupportcalculator.ca do not generate results which match those produced by DivorceMate's expensive software for professionals and do not account for all of the factors which can impact on the Advisory Guidelines formula results (such as source of income, tax benefits, deductions and credits, payments to special expenses, and so forth), the results will be fine for most people most of the time.

(One point about the Advisory Guidelines deserves particular mention. The spousal support formulas will almost always produce some numbers for spousal support. However, the mere fact that the formulas — and the www.mysupportcalculator.ca calculators — generate numbers for amount and duration does not mean that someone is entitled to receive spousal support. Entitlement must be established first. Once entitlement is established, then the results have significance.)

DivorceMate deserves much praise for making these calculators publicly available. The new website goes a long way toward addressing the need for free, public calculators which can handle the complex math required by the Advisory Guidelines.

For an overview of the Advisory Guidelines formulas and a complete review of the data they require, see my paper "Obtaining Reliable and Repeatable SSAG Calculations" (PDF) from the website of the Department of Justice.

Update: 12 July 2011

Having updated my DivorceMate software, I am pleased to report that the results of the free www.mysupportcalculator.ca calculator are an almost exact match to the results generated by the professional software when the data are limited to match the www.mysupportcalculator.ca inputs. Good job, DivorceMate!

Supreme Court Releases Decision on Retroactive Spousal Support

The Supreme Court of British Columbia has just released an important decision on retroactive spousal support, among other issues, in the case of Crowe v. Crowe. The law in this area has been changing in the last few years, roughly tracking the changes in the law on retroactive child support with a three or four year delay, and this case offers an excellent summary of the current state of things.

In this case, the court examined the recent case law, including two important recent cases of the Supreme Court of Canada, D.B.S. v. S.R.G. and Kerr v. Baranow, in the context of a review of spousal support and reached the following conclusions:

• Whether to order retroactive spousal support is a discretionary decision resting on the particular circumstances of the particular parties before the court.
  
• The factors to be considered on an application for retroactive spousal support are similar to the factors considered on an application for retroactive child support.
• These factors are the needs of the recipient, the conduct of the payor, the reason for the delay in seeking support and any hardship the retroactive award may occasion on the payor spouse.
• However, because spousal support has a different legal basis than child support and there is no presumptive entitlement to spousal support, concerns about notice, delay and misconduct will carry more weight.
• The Spousal Support Advisory Guidelines may be used to determine spousal support on a review application.
  

Separated with Children Financial Workshop

The Justice Education Society is hosting two workshops in the new year to help parents deal with the legal, emotional, social and financial turmoil of separation. The workshops will deal with:

• becoming financially independent
• dealing with your ex and children about money
• budgeting and debt issues
• child support, spousal support and property divisions issues

The workshops are free. You just need to register ahead of time. Call the society at 604-775-0856 in the lower mainland or at 1-800-775-0856 from elsewhere.

Vancouver
Monday 21 February 2011, 6:30 to 9:30 pm

Port Coquitlam
Wednesday 23 March 2011, 6:00 to 9:00pm

Spousal Support Calculators

Readers of my website will recall my frustrated attempts to create on-line calculators to handle the math required by the Spousal Support Advisory Guidelines. Despite hours and hours of effort, I simply couldn't coax JavaScript to generate exactly correct results; the math required by the "with child support" formulas is just too complex and defeated me. As a result, I decided to take my "with child support" calculator off-line rather than have people going to court with inaccurate information.

This has not proven a problem for Bryan Delaney, an Ottawa family law lawyer, whose firm's website features calculators for both the "without child support" formula and the basic "with child support" formulas at http://www.delaneys.ca/calculators_main.html. Congratulations are due to Mr. Delaney, although, with respect, I am not sure how accurate the results of his "with child support" calculator will be with the limited information it seems to require.

The surviving calculators available on my website are:

1. child support, under the old and new child support tables for British Columbia;
   
2. children's special expenses; and,
   
3. the "without child support" spousal support formula.

My technical overview of calculations under the Spousal Support Advisory Guidelines is available at the website of the Department of Justice at http://canada.justice.gc.ca/eng/pi/fcy-fea/spo-epo/calc/index.html.

Update: 25 May 2011

DivorceMate, the company that sells spousal support software to lawyers, has published a free, public spousal support calculator. Read my post on the calculator for more information, or click on the "advisory guidelines" label below.

New Paper on the Spousal Support Advisory Guidelines

The Department of Justice has just published a paper I've written on the Spousal Support Advisory Guidelines. The paper is a rather technical look at the data required to run Advisory Guidelines calculations and the determination of income for spousal support purposes, and reviews the various tax deductions, benefits and credits allowed by the Advisory Guidelines.

I'm afraid that my paper isn't very accessible as it is was written for lawyers and judges who are already familiar with and use the Advisory Guidelines frequently, nevertheless it's publicly available for anyone interested in reading it.

Supreme Court of Canada Releases Important Decision

On 19 February 2009, the Supreme Court of Canada released its judgment in Rick v. Brandsema (2009 SCC 10), a case about the duty of honesty and fair play spouses owe to each other when they are negotiating a separation agreement.

The court's judgment in this case follows the reasoning it established six years earlier in Miglin v. Miglin (2003 SCC 24), a case about separation agreements and spousal support. In Miglin, the court decided that the rules about commercial contracts shouldn't apply to separation agreements because of

"the particular ways in which separation agreements generally and spousal support arrangements specifically are vulnerable to a risk of inequitable sharing at the time of negotiation and in the future"

which largely result from the unique negotiating environment of separation agreements, an environment of

"intense personal and emotional turmoil, in which one or both parties may be particularly vulnerable."

As a result, the court held that not only must the spousal support provisions of an agreement be fair in themselves, they must be negotiated in a scrupulously fair manner, without either spouse being subject to "circumstances of oppression, pressure or other vulnerabilities."

In Rick, the court took this line of reasoning a bit further, and decided that agreements must also be negotiated with full and complete financial disclosure:

"A duty to make full and honest disclosure of all relevant financial information is required to protect the integrity of the results of negotiations undertaken in these uniquely vulnerable circumstances [of separation]. The deliberate failure to make such disclosure may render the agreeement vulnerable to judicial intervention where the result is a negotiated settlement that is substantially at variance from the objectives of the governing legislation."

The "objectives of the governing legislation" might be the objectives of a spousal support order, as set out in the Divorce Act, or it might be the presumption of an equal entitlement to share in family assets, as set out in the Family Relations Act.

To boil all this down, the cumulative effect of Miglin and Rick is that agreements must be negotiated with procedural fairness (fairness in the conduct of the negotiations) and must ultimately reflect substantive fairness (conformity with any relevant legislative goals) or court may set aside or vary an agreement:

1. The freedom of spouses to negotiate a fair settlement at the conclusion of their marriage depends on the integrity of the bargaining process.

2. The integrity of the bargaining process is at risk when a spouse pressures or manipulates the other spouse, or takes advantage of the vulnerability or weakness of the other spouse, to acheive a good deal. (Miglin)

3. The integrity of the bargaining process is at risk when a spouse fails to make full and complete financial disclosure. (Rick)

4. The integrity of the bargaining process can also be jeopardized simply by the stressful emotional circumstances of separation. (Miglin and Rick)

5. The court will intervene where the bargaining process was flawed and the terms of the agreement are at odds with the objectives of the Divorce Act or the Family Relations Act.

The court's summary is perhaps best:

"[T]he more an agreement complies with the statutory objectives, the less risk that it will be interfered with. Imposing a duty on separating spouses to provide full and honest disclosure of all assets, therefore, helps ensure that each spouse is able to assess the extent to which his or her bargain is consistent with the equitable goals in modern matrimonial legislation, as well as the extent to which he or she may be genuinely prepared to deviate from them.

"In other words, the best way to protect the finality of any negotiated agreement in family law, is to ensure both its procedural and substantive integrity in accordance with the relevant legislative scheme."

What's with that support case from Quebec?

A spousal support case out of Quebec is all over the headlines lately. The thing is, the case doesn't mean very much from a British Columbia perspective, and it's nothing for anyone in BC to worry about, and this doesn't always come through when you're reading newspaper digests of the case.

The Quebec case involves a common-law relationship and a claim for spousal support. The claimant is arguing that Quebec law breaches her Charter rights as it doesn't allow common-law couples to claim spousal support. That's not the case in BC, where our Family Relations Act has allowed common-law couples to claim support since the 1970s.

See? Doesn't mean much at all.

2008 In Review, Part 3: Case Law Roundup

This is an overview of some of the more interesting cases decided in 2008. The summaries below aren't a proper digest of each case, they just focus on the one or two issues which made the case interesting.

H(SM) v. P(R), 2008 BCSC

This case is a nice update on the law of retroactive child support. The wife sought a retroactive order going back to 2002 based on undisclosed increases in the husband's income. The court said that the simple payment of child support, which the husband had been doing all along, creates a presumption that the payor had discharged his duty. Given the wife's delay in bringing her application and the absence of any evidence that the child had suffered, the court only made an order with retroactive effect commencing mid-2007, the date when the parties exchanged financial statements.

Gonabady-Namadon v. Mohammadzadeh, 2008 BCSC

In this case, the husband, who lived most of the time in Iran, had been sending about $12,000 a month back to Canada to support his wife and children here. Following separation, the husband stopped supporting his family, pleading poverty. The court found that the husband hadn't made sufficient disclosure and imputed income to him of $250,000 a year for the purposes of support. The moral? If you're trying to duck a support obligation, you must make full and complete financial disclosure.

Loesch v. Walji, 2008 BCCA

In this case, the husband was found at an interim application to have an income of $1,600,000 per year, which figure was used to calculate a spousal support obligation of $50,000 per month, even though the Spousal Support Advisory Guidelines suggested that only the first $350,000 of the husband's income should be used to calculate his support obligation. The decision was upheld on appeal, partly on the basis that appellate courts should be very, very reluctant to interfere with interim orders.

Sihota v. Sihota, 2008 BCSC

The court in this case confirmed the dire consequences to one parent when the other parent has sole custody and sole guardianship. The mother had previously obtained an order for sole custody and sole guardianship and decided to send the child to school overseas. The husband objected and the court held that as the mother was the only person with custody and guardianship she alone had the right to make decisions about the child's living arrangements.

Majhenic v. Majhenic, 2008 BCSC

This is case is important for its discussion of the idea of "foreseeability" in variation applications. Where an order has been made about support or the care and control of children, it is usually open to someone to try and change the order where there has been a unforseeable change in circumstances. In this case, the husband had agreed at age 62 to an order requiring him to pay spousal support of $1,000 per month. On the husband's retirement at age 66 he applied to cancel his support obligation. The court required his support payments should end in three years on the basis that the husband's retirement was plainly foreseeable and it was unreasonable for the wife to assume his support payments would be permanent.

Trif v. Trif, 2008 BCSC

This case is remarkable for its unsual parenting arrangements. After separation, the wife sought to move from the Lower Mainland to Vancouver Island to pursue a new relationship and she applied for sole custody of the child. The father opposed the application and said that either the child should live with him or they should share the child's time on a rotating weekly basis. The court, after seriously criticizing a custody and access report, said that the child's time would be shared on a rotating yearly basis.

Stein v. Stein, 2008 SCC

This case is a bit complicated, but essentially the Supreme Court of Canada decided that a judge at trial can allocate responsibility for debts relating to the marriage that may or may not come into existence in the future and be for an unknown amount. The debt in question related to a tax shelter the parties had invested in during the marriage which was subject to unknown future tax consequences.

Francis v. Logan, 2008 BCSC

This is another variation-of-spousal-support-on-retirement case. Unlike Majhenic, however, the husband applied to reduce or end his spousal support obligation on retirement at age 63. The court refused the application as the husband's early retirement was entirely discretionary and not due to some illness or economic cause, and was done in the face of his spousal support obligation. The court allowed the husband to reapply when he turned 65.

Label v. Albanese, 2008 BCSC

The interesting part about this case concerns an application for retroactive child support made after the child had ceased to be a dependent minor child. The court dismissed the claim, saying that a child had to be a "child" as defined by the Family Relations Act at the time an application for child support is made, including an application for retroactive child support.

2008 In Review, Part 2: Non-Governmental Initiatives

Two of the more important developments in family law in 2008, outside of government-driven legislation and law reform, involved the Spousal Support Advisory Guidelines and the BC Parenting Coordinators Roster.

The Spousal Support Advisory Guidelines

Professors Rollie Thompson and Carol Rogerson released the final version of their paper, Spousal Support Advisory Guidelines, in July, three and a half years after the release of their Draft Proposal.

Frequent browsers of BC Family Law Resource will recall that the Advisory Guidelines describes a few formulas that can be used to calculate how much support should be paid and how long support should be paid for, once someone is found to be entitled to receive spousal support. The courts of British Columbia have embraced the Advisory Guidelines since their draft release in January 2005 with a level of enthusiasm not seen in all other provinces. In fact, our Court of Appeal, in a case called Redpath v. Redpath, made it an appealable error for a trial judge not to consider the result of the Advisory Guidelines when determining a spousal support claim!

The final Advisory Guidelines makes only modest changes from the draft release: the final version emphasizes that "indefinite" awards of spousal support aren't meant to be permanent awards of support; the ways that the formula results can be restructured have been highlighted and the exceptions to the formulas have been clarified and expanded; and, a new formula has been developed to address situations where all of the children receiving child support are adults.

More information about the final Advisory Guidelines paper can be found at www.bcfamilylawresource.com in the Spousal Support > Advisory Guidelines chapter.

The BC Parenting Coordinators Roster

The BC Parenting Coordinators Roster formally launched in September 2007, and awareness of parenting coordination as an alternative to the court process for high conflict couples increased dramatically among judges and lawyers in 2008. A significant number roster members were appointed as parenting coordinators, through agreement and by court order, last year.

The roster is presently in the process of incorporating as a non-profit society, and its inaugural annual general meeting will likely be held in the early spring of 2009.

Up to date information about the roster and the law about parenting coordination as it develops in British Columbia can be found at the roster's website, www.bcparentingcoordinators.com.