24 December 2011

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.

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