In Davidson v. Davidson, 2024 BCSC 331, the parties separated after eight years of marriage. In a consent order in September 2020, they agreed that Allan Davidson would purchase the parties’ family home in Fort McMurray and assume the mortgage while Alysa Davidson would retain a home in Vernon, B.C.
Notwithstanding that neither party claimed spousal support, the consent order contained a term that each of the parties waived the payment or receipt of spousal support. There were no children of the marriage.
Ultimately, Allan found himself unable to complete the sale, leaving Alysa to sell the home, for which she incurred additional expenses, leading the court in August 2022 to order Allan to compensate her for his share of those costs, a sum of $29,000.
Unfortunately for Alysa, her husband made an assignment into bankruptcy in March 2022, and he failed to pay the court-ordered debt to his wife. The debt was stayed as a result of his bankruptcy.
Alysa brought an application in January 2024 for an order that the court re-characterize the debt as lump sum spousal support, which would survive the bankruptcy.
The problem was that Alysa had not pleaded spousal support in the originating proceeding and her personal financial situation did not support entitlement to support, as she earned between $200,000 and $300,000 annually.
She solved the first problem by applying for an order that she be permitted to amend her pleadings to claim spousal support, and this order was made in May 2023.
Alysa’s arguments focused on a Newfoundland Court of Appeal case, Bowes v. Bowes, 2022 NLCA 5, where the court considered a similar situation. As a result of Christopher Bowes’s bankruptcy, he was relieved of the liability of the family debts, leaving creditors to chase after his wife for the sum of $64,000. The Newfoundland court determined that the additional financial burden on Michele Bowes should be compensated by way of an adjustment to Christopher’s monthly spousal support obligation. The appeal court held:
“In the circumstances, I conclude that the appropriate remedy for the judge’s failure to consider the economic consequences of the marriage breakdown (and in particular how Mr. Bowes’ bankruptcy affected Ms. Bowes’ financial position) and his related refusal to adjust spousal support is an award of additional, non-compensatory periodic spousal support (as proposed by both parties).”
Allan Davidson countered that an order that he pay spousal support to compensate his wife constituted “double recovery,” as she would have both an order for support and an order for the payment of $29,000.
He also relied on s. 198 of the Family Law Act, asserting that a limitation period barred Alysa Davidson from the order she sought as the debt was incurred over two years ago.
The court found that s. 198 of the Family Law Act did not preclude Alysa’s claim for support as the two-year limitation period was linked to the date of the parties’ divorce, and the Davidsons’ were still married. The court also held that s. 198 (3) did not decrease the limitation period based on the “discoverability” principle articulated in that section.
198 (1) Subject to this Act, a proceeding under this Act may be started at any time.
(2) A spouse may start a proceeding for an order under Part 5 [Property Division]to divide property or family debt, Part 6 [Pension Division] to divide a pension, or Part 7 [Child and Spousal Support] for spousal support, no later than 2 years after,
(a) in the case of spouses who were married, the date(i) a judgment granting a divorce of the spouses is made, or(ii) an order is made declaring the marriage of the spouses to be a nullity, or(b) in the case of spouses who were living in a marriage-like relationship, the date the spouses separated.
(3) Despite subsection (2), a spouse may make an application for an order to set aside or replace with an order made under Part 5, 6 or 7, as applicable, all or part of an agreement respecting property or spousal support no later than 2 years after the spouse first discovered, or reasonably ought to have discovered, the grounds for making the application.
The court then considered whether the original consent order wherein the parties each waived spousal support precluded the order sought by Alysa. Relying on Sandy v. Sandy, 2018 BCCA 182, the court concluded that “an order dismissing a claim for spousal support does not preclude a subsequent application for support … claims for spousal support are never truly closed, assuming that some entitlement has been established … certainty and finality cannot be achieved by drawing orders that dismiss claims for support. Nor do embellishments such as ‘if after trial’ or references to ‘future claims’ assist.”
Having overcome these hurdles, Alysa argued that she was entitled to lump sum spousal support in an amount equal to $29,000 because she was suffering an economic hardship arising from the breakdown of the marriage, pursuant to s. 15.2 (6) of the Divorce Act.
The court agreed that Allan’s bankruptcy was a significant and unexpected change of circumstances and found that the Bowes case was persuasive, but distinguishable.
Michele Bowes was a stay-at-home mother with responsibilities for five children and was entitled and awarded both needs-based and compensatory support; Alysa had no child-care obligations, worked prior to the marriage and now earned a substantial income while her husband had a nominal income and was bankrupt.
The court dismissed Alysa’s application, finding that it would be inappropriate to re-characterize a contractual debt as compensatory spousal support when she could not bring herself within the criteria for a finding of entitlement.
**This article was first published by LAW360, a publication of LexisNexis Canada.
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