In a sensible decision handed down today by the BC Court of Appeal, (Sandy v. Sandy 2018 BCCA 182) a former spouse has learned that the trial judge’s order that she could come back to the “well” after a final settlement of spousal support is unsupportable in law.
Ms. Sandy and her accountant husband settled all financial issues between them by executing a separation agreement that dealt with spousal support via a lump sum payment of $315,000. She eventually received the sum of $411,000 in spousal support because of a CRA reassessment favourable to her spouse, together with her share of the family property, an amount a little more than $1 million dollars.
At the time of the agreement the parties concurred that the husband’s income was $600,000, but did not address his future prospects or whether his income was likely to increase over time.
But his income continued to grow after the agreement was signed. He earned more than $800,000 in 2010 and more than $900,000 in 2014.
Ms. Sandy sought to vary the spousal support on the basis of a change in her health situation and her former spouse’s increase in income.
The first question for the Court of Appeal was whether it was possible to vary an order under s. 17 of the Divorce Act, where the order dismissed a spouse’s claim for spousal support.
Not surprisingly, they answered “no”, however, they acknowledged that in Ontario a five-member panel of the appeal court had decided the answer in the affirmative. Madam Justice Fenlon agreed that if the answer were to be “yes’ it would have to come from an enhanced panel of the Court of Appeal.
The next question was whether the Court could address the issue of ongoing spousal support where a dismissal had been ordered, via s. 15.2 of the Divorce Act, a first instance application. Their answer was “yes”, relying on Mr. Justice Goepel’s decision in B.G.D. v. R.W.D., 2003 BCCA 259, where it was determined that an order dismissing all future claims for spousal support is not supportable at law and it was inappropriate to oust the jurisdiction of the court.
Fenlon J. wrote:
“It is apparent, then, that an order dismissing a claim for child or spousal support does not preclude a subsequent application for support.”
Relying on Miglin v. Miglin the Court applied a two-stage analysis, finding there was nothing to suggest unfairness or non-compliance with the principles of the Divorce Act regarding spousal support. Ms. Sandy had counsel and the services of a financial advisor through the negotiations. With respect to the second stage, she had the burden of establishing a significant change in circumstances not within the contemplation of the parties at the time they signed the agreement.
While the trial judge found that Mr. Sandy’s increased income was a material change, the appeal court disagreed, saying that the trial judge made an assumption, not supported by the evidence. There was no evidence that the increase had not been in the contemplation of the parties, and the trial judge could not simply assume it had been. She noted that Mr. Sandy’s form 8 indicated that “his income fluctuated from year to year” and he estimated his next year’s income at $650,000.
The Court of Appeal offered sage advice saying:
“In my view the message to be drawn from Miglin and L.M.P. v. L.S., 2011 SCC 64 is that certainty and finality cannot be achieved by drawing orders that dismiss claims for support. Nor do embellishments such as “as if after trial” or references to “future claims” assist. Rather, parties wishing to achieve finality should set out in an order or agreement the potential changes in circumstances they have considered in reaching their agreement, and clearly identify the changes they agree will, or will not, warrant reconsideration of the terms on which they have resolved their support obligations.”
The lesson to be learned is that if your client is seeking finality in spousal support, the order or agreement must specifically identify the future changes that will or will not open the door to more support.
Lawdiva aka Georgialee Lang