Spousal Support

Spousal support History - women used to have less autonomy in relationships, less ability to self-support, imbalances of power - difficult to access divorce, but now more access and no-fault divorce - Tax impact – payor can deduct it, payee has to pay tax on it Two regimes (DA and FLA) Married spouses can ask for spousal support under FLA and DA Unmarried spouses can only ask for support under FLA (since MvH 1999) In QUEBEC civil law, only applicable to civil union or married spouses (de jure spouses) NOT COHAB Basics Re Support Legislation RE Spousal support OBJECTIVES FLA 161 (a) to recognize any economic advantages or disadvantages to the spouses arising from the relationship between the spouses or the breakdown of that relationship; 161 (b) to apportion between the spouses any financial consequences arising from the care of their child, beyond the duty to provide support for the child; 161 (c) to relieve any economic hardship of the spouses arising from the breakdown of the relationship between the spouses; 161 (d) as far as practicable, to promote the economic self-sufficiency of each spouse within a reasonable period of time. DA 15.2(6)( a) to recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown 15.2(6)(b) to apportion between the spouses any financial consequences arising from the care of their child, beyond the duty to provide support for the child; 15.2(6)(c) to relieve any economic hardship of the spouses arising from the breakdown of the relationship between the spouses; 15.2(6)(d) as far as practicable, to promote the economic self-sufficiency of each spouse within a reasonable period of time. FLA 160 Duty to provide support to entitled spouse FLA 163 Can make written agreement re spousal support. Can include start/end, where living, but not who can sleep with DA 15.2(5) and FLA 166 Misconduct of spouse not to be considered unless it a) prolongs or aggravates the need for support b) affects ability to provide support Time Limits DA 3, 4, 15.2 during divorce proceeding or in a procedure for corollary relief alone after the divorce is granted - No limitation period REQUIRES Residence in the province FLA 198 Claim within two years of a divorce (or declaration of nullity) or within 2 years of separation Quantum of Support 15.2(4) DA & 162 FLA Principles: Must be determined on consideration of the conditions, means, needs and other circumstances of each spouse, 162 Factors: the length of time of cohab, functions performed by each while cohab, existence of any agreement Amount and Duration: provides upper and lower numbers, then apply the cirumstances and facts to determine the order - Individualized to each case - Provides discretion PER DA you can ask for support order: on interim order, on divorce order or on variance of an order Grounds for Entitlement to Support Compensatory Grounds: Moge v Moge feminization of poverty Bracklow We need to value the impact that those “Intended to recognize that spouses are entitled to be compensated for contributions to a relationship and for losses incurred on its breakdown” one spouse can be compensated for what they did in the relationshpis Goal of self-sufficiency not required or paramount Moge JUST “as far as practicable” GOAL: Maintaining standard of living (Bracklow) - Evaluated based on your actual standard of living as a spouse (should be as close as possible to when you were in functioning unit - Not synonymous with basic necessities - Bracklow emphasized the promotion of equality, autonomy, provide for a clean break, and to allow for selfmaximization after divorce Independent model of marriage – Moge and Bracklow - Based on the notion that each party of marriage is an autonomous actor who retains his or her economic independence throughout marriage - Even though they are formally committed to each other, they regard themselves as free agents in a marriage that can be terminated - Encourages rehab and self-maximization of dependent spouses - Recognizes the social reality of shorter marriages and successive relationships Non-compensatory Grounds Bracklow Arises out of the relationship itself and is based on the social obligation of a spouse to look after a former partner who is in difficulty rather than letting that burden fall upon the public Basic social obligation model – need and means Bracklow - Primary responsibility falls on the former spouse to provide for the ex, rather than on the govt - Model founded on a historical notion that marriage is a permanent obligation - Primary purpose of spousal support payments is to replace lost income that spouse used to enjoy in marriage - Not unfair to ask partners to support each other due to their mutual interdependence Contractual Grounds Miglin Based on contracts that the couple have - Prenups, separation agreements etc - Courts will respect agreements to an extent possible - However there are policy and social imperatives – need to strike a balance between security and certainty in the agreements - Prenup may no longer be fair as relationship unfolded Modern marriages are a complex mix of interdependence and independence - Both models provide significant policy concerns and social values, neither can achieve just law of support on own - Both models provide important policy objectives Its critical to recognize and encourage the self-sufficiency of each spouse Yet equally vital to recognize that new relationships may occur creating new obligations which they cannot meet if they are stuck paying for old spouse Important to recognize the goals of independence are impeded by patterns of marital dependence, - Too often its impossible to be self-sufficient at the end of a marriage as an economic partnership that just ended Contractual and compensatory Spouses may have obligation to meet or contribute to the needs of their former partners where they have capacity to pay, even in the absence of a contractual or compensator foundation for the obligation Basic premise: Parties are equal – and each is entitled to what they contracted for and what they lost due to a) the marriage and b) its breakdown “Even though marriage created dependencies, it is the duty of spouses to free themselves from their dependencies and assume self-sufficiency, thereby mitigating the need for continued compensation” at 29 Moge v Moge, [1992] 3 SCR 813 * consider all objectives when determining support, not means and needs test All objectives need to be considered, none is paramount - Self-sufficiency is only one objective, does not the be given priority in determining quantum and duration of support order - Means and needs test is no longer the exclusive criterion of support There is no doubt that divorce and its economic effects are playing a role in the feminization of poverty in Canada. In most marriages the wife still remains the economically disadvantaged partner. It would thus be perverse in the extreme to assume that parliaments intention in enacting the act was to penalize women in this country financially. Bracklow v Bracklow, [1999] 1 SCR 420 at pages 420-423 and paras 23-33, 49, 58-60 * spouses owe a mutual duty of support Facts: Female spouse could not work and was sick. Breakdown of marriage significantly impacted her life - Absent indications to the contrary, when two spouses are married, they owe each other a mutual duty of support. So even though the couple didn’t seem to have intra-marital financial interdependence, there remained a right to be supported outside of marriage. - Marriage is a joint endeavour, a socio-economic partnership - DA and provincial leg is aimed to deal with economic consequences of the marriage breakdown for both parties. Decision: Court found that divorce rendered the appellant in a state of economic hardship, and therefore she is eligible for support based on the length of cohab, hardship marriage breakdown imposed on her, her palpable need, and the respondent’s ability to pay. Ratio: 1. First step is to review the DA objectives 15.2 that a support order should serve. a. No single objective is paramount, all must be borne in mind b. Include non compensatory factors 2. Judge must look at all factors in light of the stipulated objective and make order that equitably alleviates the adverse consequences of the marriage breakdown to achieve justice in the particular case. 3. Presumption of intra-marital mutual interdependency, rebuttable by facts How much should be awarded? 1. Consider all the variables – some more important than others but all considered 2. Establish entitlement (compensatory, non-compensatory, contractual) The factors that go to entitlement have an impact on quantum 3. Then make adjustments through quantum (amount and duration) Miglin v Miglin, [2003] 1 SCR 303, 303-311 * Test for setting aside / modifying / enforcement of support agreements FLA 164 BC has legislated Miglin in order to clarify the test for setting aside agreements respecting spousal support MIGLIN’S TWO STAGE ANALYSIS TO UPHOLD A SUPPORT AGREEMENT 1. Assessing procedural fairness of the agreement – was the formation of the agreement “unimpeachably negotiated? 164(3) Factors to consider: 1. representation by counsel: the degree of professional assistance received by the party is relevant, but a court should not presume an imbalance of power. 2. circumstances: was one or both parties vulnerable and if so, did presence of counsel rectify this vulnerability? Free from pressure, free from oppression, nobody took advantage of the other spouse’s vulnerability? 3. duration of negotiations: was the agreement negotiated over a reasonable amount of time? 2. Assessing the fairness of the agreement Substance of the agreement: does the agreement remain in substantial compliance with the objectives of the Divorce Act 15.2(6) or the FLA 161 (whichever Act they are using)? i. An agreement can be modified to bring it in line with the principles in the Act. 164(5) length of time since the agreement was made, changes in the condition needs means or other circumstances of a spouse, intention of the spouses when they made it, degree to which they relied on the terms of the agreement, degree to which the agreement meets the objectives in s 161 The analysis should not be restricted to the spousal support component – look at the whole agreement; the agreement as a whole should substantially comply with the factors and objectives of the Act (including the principles of certainty, autonomy and finality). Is the agreement still in line the parties' original intentions: were the current circumstances anticipated when the agreement was drafted? - Was there a change in circumstances that were foreseeable at the time it was drafted? - Foreseeability is interpreted broadly; circumstances do not have to have been explicitly considered/contemplated - Foreseeable circumstances include a change of job, assets going down in value, etc. Leskun v Leskun, [2006] 1 SCR 920 at pages 920-922 * misconduct is not relevant to entitlement in DA 15.2(5) FLA 166 Facts: Married 1978 x 20 years, Wife worked, husband to school, wife had child. Wife injured, fired from job, Husband divorced her to marry another woman Trial: ordered 2250 /mo until she returned to work, then it would be reviewed. CA husband applied to discontinue as he was unemployed, denied as wife was not self-sufficient yet, based on husband’s misconduct in the marriage SCC: Order upheld, although DA eliminates misconduct as relevant to award for support DA 15.2(5). So while the CA dismissed husband’s application to lower payments on the wrong basis (he had shown misconduct in the marriage) – it still was reasonable to deny lowering the payments on other relevant factors. So order was upheld. NOTE: FLA does not recognize misconduct either! FLA 166 Spousal Support Advisory Guidelines JULY 2008 pp 27-36, 51-52, 72-76. • • The law of spousal support had become more unstructured, more discretionary and more uncertain over time, particularly since 1999 in the wake of Bracklow. After Moge and prior to Bracklow, there had been some hope that a principled approach to spousal support was developing through the case law. It subsequently became clear that the normal process of judicial development had effectively come to a halt. In that situation, spouses, lawyers and judges began to find attractive the greater certainty and predictability that guidelines would bring, even guidelines that were not perfect. Benefits of calculated regime of spousal support (similar to child support) - Easier for lawyers and judges to calculate - Can create consistency legitimacy and fairness - Can reduce conflict and encourage settlement - Provide a basic structure for judicial elaboration Income sharing: - Core concept on which SSAG are built - Looks at imcome of parties (and disparirty between them) and uses math formula to determine the portion of spousal incomes to be shared - Income sharing does not mean equal sharing - Can be a practical and efficient way of implementing many support objectives such as compensation for the economic advantages and disadvantages of the marriage or the recognition of need and economic dependency Applicability of SSAG: - Voluntary …. not legislated or legally binding … (unlike child support guidelines) BUT as per case law they are expected to be used in BC: - Yemchuk v Yemchuk, 2005 BCCA 406, SSAG reflects the current law, build upon existing law, appealing, useful tool in assessing amount and duration - Redpath v Redpath 2006 BCCA 338 incorporated SSAG ranges into the standard of appellate review - Dunnigan v Park 2007 BCCA 329 “in determining the quantum of support the trial judge referred to the SSAG as he is obliged to do” at 16 - Does not deal with entitlement – remains subject to entitlement provisions of DA 15.2(4) and (6) - An income disparity alone does not generate an amount of entitlement under the SSAG - The broad conceptual framework for spousal support articledated by the SCC in Moge and Bracklow has been relied upon under both prov and federal legislation - Both federal and provincial leg can be overlapped and used - Prov laws differ from the DA in their application to unmarried couples but should not cause any difficulties with respect to the operation of the SSAG - Length of marriage applies to unmarried as length of cohab - Does not override final agreements on spousal support - Apply to interim as well as final orders SSAG Pros and Cons - Payne and Payne, Canadian Family Law, pp 340-352 Advantages: - guidelines provide the party and the court with a starting point for negotiations - reduce conflict - reduce cost and improve efficiency - simplify process Disadvantages: - Too rigid? - Too complicated? - Might over limit ability to negotiate based on circumstances Dunnigan v Park, 2007 BCCA 329 at para 16 * CL expectation that Judge will use the SSAG [16] In determining the quantum of support the trial judge referred to the Spousal Support Advisory Guidelines, as he is obliged to do. … In so doing, he properly used the Spousal Support Advisory Guidelines as just that, a guide to a range of awards, rather than as a set figure which must be applied or awarded. Redpath v Redpath, 2006 BCCA 338 at paras 37-42 * old CL – SSAG was to provide a “Range” changed in Dunnigan [38] I do not read Yemchuk as indicating that the Guidelines must as a matter of law be used by a judge in determining support. The same is true of this court’s judgments in Tedham v. Tedham, 2005 BCCA 502 (see especially paras. 75-6), and Kopelow v. Warkentin, 2005 BCCA 551 (see especially paras. 75-6). However, as a “useful tool”, the Guidelines may indicate whether a proposed award is “in the range” of what should be a pattern of predictable maintenance awards across the province and across Canada. [42] Cases such as Hickey, however, were decided prior to the introduction of the Advisory Guidelines. Now that they are available to provide what is effectively a “range” within which the awards in most cases of this kind should fall, it may be that if a particular award is substantially lower or higher than the range and there are no exceptional circumstances to explain the anomaly, the standard of review should be reformulated to permit appellate intervention. Spousal Support Formulas Require accurate income determination - There may be incentives to dispute income - Starting point is the definition of income under the federal child support guidelines and schedule III adjustments - SSAG does not solve complex issues of income determination that arise in cases involving self-employment income - Can impute income in situations where the actual income doesn’t reflect his or her earning capacity Without child support: Amount of spousal support Increases with length of marriage longer * includes premarital cohab, ends w separation 1.5 to 2 % of the difference between the gross incomes for each year of marriage, To a max of 37.5 to 50% of the gross income difference for marriages of 25 years or more (upper cap of 50% is equalization) Duration of spousal support Increases with length of marriage longer * includes premarital cohab, ends w separation 0.5 to 1 year of support for each year of marriage, Indefinite: after 20 years OR if the marriage has lasted 5 years or longer, when the years of marriage and age of the recipient added together total 65 or more (the 65 rule) With child support (concurrent child support obligation) Theoretical: • Primary rationale for spousal support is compensatory – after Moge spouses must “compensate each other for foregone careers and missed opportunities during the marriage upon the breakdown of their union” (Brackenlow) o Missed opportunities and foregone careers because they assumed primary responsibility for care of children o DA 15.2(6)(a) Creates disadvantage or loss at end of marriage warranting compensatory support • Marriages with dependent children raise strong compensatory claims based on the economic disadvantages flowing from assumption of primary responsibility for child care, not only during the marriage, but also after separation. - For marriages with dependent children, length of marriage is not the most important determinant of support outcomes as compared to post-separation child-care responsibilities. Practical: - child support must be calculated first and given priority over spousal support. - the differential tax treatment of child and spousal support must be taken into account, complicating the calculations. - use computer software calculations of net disposable incomes Formula: - upper and lower % limits do not change with length of marriage - uses net income not gross (1) Determine the individual net disposable income (INDI) of each spouse: - Guidelines Income minus Child Support minus Taxes and Deductions = Payor’s INDI Guidelines Income minus Notional Child Support minus Taxes and Deductions plus Government Benefits and Credits = Recipient’s INDI (2) Add together the individual net disposable incomes. By iteration, determine the range of spousal support amounts that would be required to leave the lower income recipient spouse with between 40 and 46 per cent of the combined INDI. - Should leave recipient spouse with 40- 46 percent of the spouses’ net incomes after child support has been taken out Individual Net Disposable Income (INDI) - The approach to duration under this formula is more complex and flexible than under the without child support formula; orders are initially indefinite in form (duration not specified) but the formula also establishes durational ranges which are intended to structure the process of review and variation and which limit the cumulative duration of awards under this formula. These durational limits rely upon both length of marriage and the ages of the children. - Formula depends on custodial arrangements (shared and split need variations of computation of INDI) - Also different if spousal support is paid by the custodial parent - Also different if the child is an adult Payor’s income: Floor $20,000 INDI Ceiling $350,000 INDI Exceptions: • compelling financial circumstances in the interim period; • debt payments; • prior support obligations; • illness or disability of a recipient spouse; • a compensatory exception for shorter marriages under the with child support formula; • reapportionment of property (British Columbia); • basic needs/hardship under the without child support and custodial payor formulas; • non-taxable payor income; • non-primary parent to fulfil a parenting role under the custodial payor formula; • special needs of a child; and • section 15.3 for small amounts and inadequate compensation under the with child support formula. Estimate the spouses disadvantage or loss by determining what their career or employment path might have been had they not adopted their role in the marriage (not easy!) - Can use standard of living changes - Conventional budget analysis Parental partnership rationale: DA s 15.2(6)(b) - The obligation for spousal support flows from parenthood rather than marriage itself - Kids matter most: Not the length, interdependency - Looks at past and future loss or economic disadvantage from present and future child care responsibility