WARNING
The court hearing this matter directs that the following notice should be attached to the file:
The court has ordered the exclusion of the public from the hearing of this case under subsection 135(2) of the Courts of Justice Act, R.S.O. 1990, c. C-43, as amended, and has expressly prohibited the disclosure of any information about the identity of the children and parties in this case. This subsection and subsection 135(3) of the Courts of Justice Act, which deals with the consequences of failure to comply with subsection 135(2), read as follows:
135.—(2) Exception.— The court may order the public to be excluded from a hearing where the possibility of serious harm or injustice to any person justifies a departure from the general principle that court hearings should be open to the public.
(3) Disclosure of information.— Where a proceeding is heard in the absence of the public, disclosure of information relating to the proceeding is not contempt of court unless the court expressly prohibited the disclosure of the information.
Punishment for contempt is set out in subrules 31(5) and 31(6) of the Family Law Rules, O. Reg. 114/99, which state as follows:
(5) Contempt orders.— If the court finds a person in contempt of the court, it may order that the person,
(a)
be imprisoned for any period and on any conditions that are just;
(b)
pay a fine in any amount that is appropriate;
(c)
pay an amount to a party as a penalty;
(d)
do anything else that the court decides is appropriate;
(e)
not do what the court forbids;
(f)
pay costs in an amount decided by the court; and
(g)
obey any other order.
(6) Writ of temporary seizure.— The court may also give permission to issue a writ of temporary seizure (Form 28C) against the person’s property.
CITATION: S.P. v. R.P., 2011 ONCA 336
DATE: 20110502
DOCKET: C52096
COURT OF APPEAL FOR ONTARIO
MacPherson, MacFarland and Epstein JJ.A.
BETWEEN
S.P.
Applicant (Respondent)
and
R.P.
Respondent (Appellant)
Avra Rosen and Nadine Waldman, for the appellant
Dani Frodis, for the respondent
Heard: February 28, 2011
On appeal from the order of Justice Victor Paisley of the Superior Court of Justice dated April 16, 2010.
MacPherson J.A.:
A. INTRODUCTION
[1] In this family law appeal, the appellant R.P. (“the husband”) appeals the order of Paisley J. of the Superior Court of Justice dated April 16, 2010, requiring the husband to pay the respondent S.P. (“the wife”):
• the sum of $260,000 for child support arrears for the third child of the marriage (“TC”);
• the sum of $203,000 for spousal support arrears; and
• the sum of $2,000 per month for ongoing spousal support on an indefinite basis.
[2] The husband also appeals the costs order of the trial judge dated November 29, 2010, requiring the husband to pay $107,082.50 in costs.
B. FACTS
(1) The parties and the events
[3] The husband and wife married on September 8, 1973, separated after more than 18 years of marriage on December 31, 1991 (“the separation date”), and divorced on May 5, 2000.
[4] The parties have three children, a daughter born on August 12, 1978, a son born on February 27, 1981, and a daughter TC, born on May 13, 1985. Today these children are 32, 30 and 25 years old.
[5] The wife was a full-time homemaker from the birth of the first child in 1978 until the separation date, a period of more than 13 years. Following the separation date, she completed an 18-month law clerk course at Seneca College. Since the summer of 1993, she has worked as a corporate law clerk.
[6] The husband is a chartered accountant. He was a partner at Ernst & Young LLP from 1984 to 1991, Vice President (Finance) of a company listed on the New York Stock Exchange from July 1991 to June 1995, and Vice President (Finance) and Chief Financial Officer of a company listed on the Toronto Stock Exchange from September 1996 to December 1999. Since 2000, he has served as a senior financial officer of several companies, working in a consulting capacity.
[7] The wife has not cohabitated with anyone since the separation date. The husband moved in with his current wife at the separation date. There are no children of the husband’s second marriage.
[8] TC, the youngest child, was six years old at the separation date. She attended Dalhousie University in Halifax from 2003 to 2007, graduating with a Business Management degree. As a graduation gift, her mother paid for her to take a three-week trip to Europe with her older sister. On her return, TC began looking for full-time employment, which she obtained commencing September 17, 2007.
[9] On September 22, 1993, the husband and wife entered into a Separation Agreement. The wife was given sole custody of the three children.
[10] The husband agreed to pay child support of $1611.11 per month for each of the three children.
[11] The husband agreed to pay spousal support on a sliding scale - $1,250 per month from 1993 to 1996, $833.33 per month for 1997, $666.66 per month for 1998, $416.66 per month for 1999, and $1 annually thereafter.
[12] There was a cost-of-living-allowance (“COLA”) clause for spousal and child support and a clause providing for variation “by mutual agreement or by application to the Court if there is a material change in circumstances.”
[13] The husband left a corporate position in June 1995 and did not obtain a new position until September 1996. The wife agreed to accept reduced spousal and child support. In 1997, the husband advised the wife that he had a new job with a salary of $140,000. The wife again agreed to accept reduced support over the next three years.
[14] In 1996 and 1997, the husband and wife signed three documents amending their separation agreement. The result of these amendments for the years 1996 to 1999 was that the husband paid substantially less for both spousal and child support than he would otherwise have paid under the Separation Agreement.
[15] In December 1999, the husband said that he could restore child support payments to the original amount set out in the Separation Agreement. In 2002, he advised that he was unemployed again and would be unable to pay any child support. In August 2003, the husband resumed paying child support for TC, who was commencing her studies at Dalhousie University.
[16] From 1995 (the year before the first amending agreement) to 2007 (the year the wife commenced legal proceedings), the parties’ gross incomes were:
Calendar Year
Husband($)
Wife($)
1995
487,462
1996
75,975
44,847
1997
325,804
49,733
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
168,954 191,998 487,837 9,460 119,634 294,221 273,657 64,438 160,079 197,725
37,863 32,567 37,643 41,818 46,049 45,780 57,273 66,054 66,043 75,010
[17] In July 2003, the wife called the husband to request copies of his tax returns and income information that was required to complete a student loan application for TC. The husband had not paid any child support since January 1, 2002 and the wife was under the impression that he was still unemployed. During this conversation, the husband admitted that he had resumed employment and earned $100,000 in 2002.
[18] It was at this juncture that the wife began to think that the husband had not been fair with her and the children with respect to support. She began to request financial disclosure from him, which he ignored.
[19] On August 30, 2007, the wife filed an application seeking income disclosure and retroactive child and spousal support. Over time, the application was amended until the claim went to trial in 2010 for arrears of child and spousal support and ongoing spousal support.
(2) Paisley J.’s decision
[20] After a seven-day hearing, with testimony from the husband and wife, the application judge rendered a decision strongly in favour of the wife. He found that TC was “a dependent child of the marriage until she commenced full time employment” in September 2007. He also found that the husband “intentionally failed to disclose to the [wife] the benefits he received from the date of separation, during negotiations leading to the separation agreement and the amendments to it, until disclosure was ordered during the course of this litigation.” The application judge also noted that “[t]he disparity in the real income of the parties from the date of separation was substantial.” He found that the husband did not advise the wife that “he had obtained stock options from a subsequent employer…worth $175,375 in 1999, which could have been exercised by him while he was underpaying support.” He concluded, based on the expert testimony of Andrew Freedman, who prepared a report for the wife, that in the period 1995-2010 the husband’s real income was $4,900,000 and the wife’s real income was $783,738.
[21] The application judge recorded that the wife’s “claim for arrears of child support [for TC only] amounts to $260,000 and $203,000 for arrears of spousal support.” He concluded:
The Respondent has not acted equitably towards his former wife and his children. He has received a windfall benefit, in that the Applicant was unable to claim all arrears that would have been owed to her with respect to the parties’ elder two children. The Applicant’s claim is allowed as requested. She is owed $463,000 for arrears of support, and $2,000 per month ongoing support.
[22] The trial judge awarded costs of $107,082.50 to the wife.
[23] The husband appeals the application judge’s decision. He challenges the awards of retroactive child and spousal support and ongoing spousal support. He also contests the costs award.
C. ISSUES
[24] The husband raises the following issues:
(1) Did the wife have standing to make a claim of retroactive child support for her daughter TC?
(2) If the answer to (1) is ‘yes’, did the application judge err by making an award of retroactive child support for TC?
(3) If the answer to (2) is ‘no’, did the application judge err by awarding retroactive child support for TC from 1995 to 2007?
(4) Did the application judge err by fixing the amount of retroactive child support for TC at $260,000?
(5) Did the application judge err by awarding retroactive spousal support to the wife?
(6) If the answer to (5) is ‘no’, did the application judge err by awarding retroactive spousal support to the wife from 1995 to 2010?
(7) Did the application judge err by fixing the amount of retroactive spousal support at $203,000?
(8) Did the application judge err by awarding ongoing spousal support of $2,000 per month?
(9) Did the application judge err by awarding the wife costs fixed at $107,082.50?
D. ANALYSIS
(1) The wife’s standing to seek retroactive child support for TC
[25] The husband contends that the wife has no standing to advance a claim for retroactive child support for TC because her application under the Divorce Act, R.S.C. 1985, c. 3, was not made until February 2, 2009 and, by that time, TC was no longer a “child of the marriage”.
[26] Section 2(1) of the Divorce Act provides:
In this Act ... “child of the marriage” means a child of two spouses or former spouses who, at the material time, ... is of the age of majority or over and under their charge but unable, by reason of illness, disability or other cause, to withdraw from their charge or to obtain the necessaries of life.
[27] In February 2009, TC was 23 years old and living in Korea with her boyfriend.
[28] However, I am not prepared to accept that February 2, 2009 is the relevant date. That is the date on which the wife, representing herself, filed an Amended Application seeking retroactive child support for TC under the Divorce Act. However, for several years before, the wife, representing herself, had tried with little success to obtain financial disclosure from the husband with a view to making a claim for retroactive child and spousal support. Moreover, and importantly, she made an application for these categories of relief on August 30, 2007. It is true that she did not cite the Divorce Act or any other statute in this application. However, I hardly regard this omission as fatal in the context of a self-represented litigant doing her best to complete the relevant application document. Accordingly, I conclude that the relevant date for determining whether TC was a “child of the marriage” within the meaning of s. 2(1)(b) of the Divorce Act is August 30, 2007.
[29] TC finished her studies and graduated from Dalhousie University in June 2007. When she returned from her three-week European vacation, she resumed living with her mother and began immediately looking for a job. She was successful and started to work on September 17.
[30] The husband contends that TC was a child of the marriage only until April 2007, when TC completed her full-time studies, or, at the latest, when she graduated in June 2007.
[31] I disagree. In Thompson v. Ducharme (2004), 2004 MBCA 42, 237 D.L.R. (4th) 596 (Man. C.A.), Kroft J.A. said at para. 14:
[W]hile the meaning of “charge” has some uncertainty, the act of withdrawing from the “charge” of a parent is an act performed by the child. The word “charge” may be somewhat ambiguous, but I am quite sure that as used in s. 2(1) of the Act, it is intended to be an economic term. To be in the charge of a parent means, as s. 15.1 says, that a parent pays for the support of the child. That means care.
[32] TC remained a “charge” of her mother until she started work on September 17, 2007. I see nothing in the conduct of either TC or the wife in the three months between TC’s graduation from university and her commencement of her employment that would disqualify her as a child of the marriage. A modest transition – involving a brief holiday followed by a genuine search for employment – between a four-year university program and the start of a new job is not, in my view, outside the ambit of the notion of parental charge in s. 2(1) of the Divorce Act: see, for example, Hartshorne v. Hartshorne (2010), 2010 BCCA 327, 82 R.F.L. (6th) 1 (B.C. C.A.), at para. 76; Erickson v. Erickson (1999), 1999 CanLII 1822 (NS SC), 175 N.S.R. (2d) 185 (Sup. Ct.), at para. 12; and Daye v. Ekkebus, 2008 BCSC 362, at para. 10.
[33] Accordingly, I conclude that the application judge was correct to grant standing to the wife to make a claim for retroactive child support for TC.
(2) Is retroactive child support for TC appropriate?
[34] The husband submits that the application judge misinterpreted and misapplied the test in D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231 (“D.B.S.”), regarding retroactive child support.
[35] In D.B.S., Bastarache J. emphasized at para. 99 that in considering the question of retroactive support, a court should strive for a holistic view of the matter and decide each case on the basis of its particular facts. Bastarache J. also set out at paras. 100-116 four factors that should be considered in making a retroactive child support order, noting that none of the factors is decisive: the reason why support was not sought earlier, the conduct of the payor parent, the circumstances (both past and current) of the child, and potential hardship on the payor parent flowing from a retroactive award.
[36] The application judge addressed only the conduct of the payor parent. I will consider all four factors.
[37] With regard to delay, it was reasonable for the wife to seek voluntary disclosure from the husband before commencing litigation. The husband was unresponsive to her reasonable inquires. Accordingly, this factor favours the wife.
[38] The application judge dealt comprehensively with the husband’s conduct. He criticized it in forceful language. I agree with his critique. Under the Separation Agreement, the husband had an obligation of “full disclosure … in all significant matters affecting the health, education and welfare of the children.” However, the husband negotiated significant reductions in his child support payments without disclosing to the wife his exercise of valuable stock options, his receipt of generous severance packages, the fact and effect of his rare book donations to the University of Toronto on his tax situation, and his returns to work after periods of unemployment. His secrecy and silence in all of this was highly reprehensible.
[39] The circumstances of TC present a mixed picture. Looking backward, the wife testified about how difficult it was to raise three children on a very modest law clerk’s salary over many years. She also testified that money was a constant source of worry for TC while she was at university. On the other hand, TC was self-supporting by 2010.
[40] There was no evidence that a retroactive child support payment would cause hardship to the husband. Indeed, his income in 2009 and 2010 was $192,000 each year. His income tax in 2009 was $19,000 and in 2010 was $8,000. The husband has no other child dependants. I also rely on Justice Bastarache’s comment at para. 116 of D.B.S. that hardship for the payor parent is much less of a concern where it is the product of his/her own blameworthy conduct. In this case, the husband improperly reduced his child support payments and presented a misleading picture of his financial circumstances.
[41] Weighing these four factors together, I conclude that the application judge was correct to make a retroactive child support order in favour of TC.
[42] I make one final observation. In D.B.S., Bastarache J. said at para. 97:
Lest I be interpreted as discouraging retroactive awards, I also want to emphasize that they need not be seen as exceptional. It cannot only be exceptional that children are returned the support they were rightly due. Retroactive awards may result in unpredictability, but this unpredictability is often justified by the fact that the payor parent chose to bring that unpredictability upon him/herself. A retroactive award can always be avoided by appropriate action at the time the obligation to pay the increased amounts of support first arose.
In my view, this passage is entirely apposite to this appeal.
(3) The time frame for the retroactive child support order in favour of TC
[43] The husband contends that the application judge erred by awarding retroactive child support to 1995. Relying on the “general rule” in D.B.S. at para. 118, he submits that an award of retroactive child support for TC would be triggered by the wife’s application on August 30, 2007 and go backwards, at most, three years: D.B.S. at para. 123.
[44] I do not accept this submission. The application judge explicitly relied on the exception to the general rule that is also articulated in D.B.S., namely, if the payor parent engages in blameworthy conduct, then the presumptive date of retroactivity moves back to the time of that conduct. As explained by Bastarache J. at para. 124:
The date when increased support should have been paid, however, will sometimes be a more appropriate date from which the retroactive order should start. This situation can most notably arise where the payor parent engages in blameworthy conduct. Once the payor parent engages in such conduct, there can be no claim that (s)he reasonably believed his/her child’s support entitlement was being met. This will not only be the case where the payor parent intimidates and lies to the recipient parent, but also where (s)he withholds information. Not disclosing a material change in circumstances – including an increase in income that one would expect to alter the amount of child support payable – is itself blameworthy conduct. The presence of such blameworthy conduct will move the presumptive date of retroactivity back to the time when circumstances changed materially. A payor parent cannot use his/her informational advantage to justify his/her deficient child support payments.
[45] In 1996, the husband negotiated a significant reduction in child support even though his income in 1995 was $487,462. This was blameworthy conduct.
[46] Over the next three years (1997-1999) under the amending agreements he negotiated, the husband paid spousal and child support of $46,656, $37,863 and $32,567 instead of the amounts contemplated in the original Separation Agreement, namely, $68,000, $66,000 and $63,000 plus COLA each year.
[47] The husband’s income in those three years was $325,804, $168,954 and $191,998. He paid income tax of $502, $843 and $8,794.
[48] These numbers are startling. The husband clearly could have met – easily – his support obligations to his family throughout this entire period. His refusal to do so was blameworthy conduct.
[49] Accordingly, I conclude that the application judge was correct in the way he applied D.B.S. to determine that the time frame for retroactive support was 1995 to 2007.
(4) The amount of retroactive child support for TC
[50] The husband contends that the application judge erred by fixing the amount of retroactive child support for TC at $260,000.
[51] I do not accept this submission. It is true that the parties had entered into a Separation Agreement and that there was no request to have it entirely set aside. Despite the application judge’s finding at para. 11 of the husband’s “intentional failure to disclose to the Applicant the benefits he received from the date of separation, during negotiations leading to the separation agreement and the amendments to it”, there was no consideration of the test required to set aside an agreement negotiated by the parties with the benefit of counsel.
[52] That said, the Separation Agreement did provide for variation. Clause 13 of the agreement states that, “Sections 7,8,9,10,11 and 12 may be varied by mutual agreement or by application to the Court if there is a material change of circumstances.”
[53] The test for a material change of circumstances is set out by the Supreme Court of Canada in Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303, in the context of determining whether spousal support should be awarded, given a release of spousal support in a separation agreement. At paragraph 88, the court stated:
The parties’ intentions, as reflected by the agreement, are the backdrop against which the court must consider whether the situation of the parties at the time of the application makes it no longer appropriate to accord the agreement conclusive weight. We note that it is unlikely that the court will be persuaded to disregard the agreement in its entirety but for a significant change in the parties’ circumstances from what could reasonably be anticipated at the time of negotiation. Although the change need not be “radically unforeseen”, and the applicant need not demonstrate a causal connection to the marriage, the applicant must nevertheless clearly show that, in light of the new circumstances, the terms of the agreement no longer reflect the parties’ intentions at the time of execution and the objectives of the Act. Accordingly, it will be necessary to show that these new circumstances were not reasonably anticipated by the parties, and have led to a situation that cannot be condoned.
[54] In this case, the fact that the parties revisited the Separation Agreement upon a moderate change in the husband’s income can be seen to reflect the parties’ intention in relation to the circumstances under which variation would be appropriate. Given the husband’s request to revisit the terms of the Separation Agreement when his income level changed, he must accept that the same type of change justifies a variation in the wife’s favour.
[55] Clause 8 of the Separation Agreement states that, “it is the parties’ expectation that within a reasonable period of time, the wife’s income will increase, commensurate with her experience”. In fact, the wife’s income decreased from 1997 to 1998 and did not rally until 2004. The wife’s low income during this period can easily be viewed as causally connected to the marriage given that the wife was out of the work-force from the birth of the first child until the date of separation 13 years later. Causal connection to the marriage is not required for a finding of material change, but it certainly strengthens the case for variation.
[56] Moreover, as set out by Justice L’Heureux-Dubé in Willick v. Willick, 1994 CanLII 28 (SCC), [1994] 3 S.C.R. 670, a proper variation of child support where a mother’s income increases takes into account the needs of the children as well as the increased income of the wife. An increase in the mother’s income could very well lead to a conclusion that although the amount of spousal support should be reduced, the amount of child support should be commensurately raised in order to address realistically the situation of the family and the fact that child support had previously been understated because of its interrelationship with the means of the payor.
[57] Conversely, here, where the wife’s income was lower than anticipated, and the father’s income was quite high for a number of the years in question, it is appropriate for the amount of the child support to more closely reflect the means and standard of living of the payor parent.
[58] For these reasons, I see no reason to interfere with the trial judge’s implicit finding of a material change in circumstances and his decision to accordingly award child support arrears in excess of those specified under the Separation Agreement and instead in accordance with the Child Support Guidelines. The application judge explicitly accepted the report of the husband’s income prepared by the wife’s expert, Andrew Freedman of Cole Valuation Partners Limited, and calculated the amount of child support owing on that basis.
(5) Retroactive spousal support
[59] The principles relating to the award of retroactive spousal support are similar to those considered in the award of retroactive child support. In Kerr v. Baranow, 2011 SCC 10, Cromwell J. for the court stated at para. 207:
…similar considerations to those set out in the context of child support are also relevant in deciding the suitability of a “retroactive” award of spousal support. Specifically, 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, in spousal support cases, these factors must be considered and weighed in light of the different legal principles and objectives that underpin spousal as compared with child support.
[60] For reasons similar to those dealing with retroactive child support for TC, the wife is entitled to at least some retroactive spousal support. At a minimum, from 1996 to 1999 the spousal support she received was unfairly reduced by her acceptance of the misinformation coming from the husband.
(6) The time frame for retroactive spousal support
[61] The application judge awarded the wife retroactive spousal support from 1995 to 2010 in the amount of $203,000. The husband contends that this award is completely inconsistent with the Separation Agreement, which provided for sliding-scale and time-limited spousal support.
[62] For the reasons already outlined in relation to the quantum of the award of child support, the application judge was also in my view justified in varying the terms of the Separation Agreement in relation to the quantum and duration of spousal support.
[63] The wife’s income did not increase in the manner contemplated by the parties at the time of negotiating the Separation Agreement, and the husband set a low bar for a ‘material change in circumstances’ when he himself requested a variation on the basis of a drop in income.
[64] On an appeal of a decision ordering spousal support, the appellate court should not overturn the order unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the order was clearly wrong: Hickey v. Hickey, 1999 CanLII 691 (SCC), [1999] 2 S.C.R. 518 at para. 11.
[65] While I do not believe that the application judge erred in making some variation to the amount of spousal support owing under the Separation Agreement, I do think he erred in principle in ignoring the terms of the Separation Agreement altogether.
[66] Under the Separation Agreement, spousal support was to be relatively low, provided on a sliding scale and time-limited. Clause 8(2)(e) of the Agreement provided that spousal support continue in the amount of $1.00 per year from January 1, 2000 onwards such that the door to variation was kept open. It is also important to note that the child and spousal support provisions were not agreed to in isolation but were made in the context of the entire agreement including the division of matrimonial property.
[67] This given, the Separation Agreement negotiated by the parties should still serve as a guide as to what the parties may have agreed to in terms of spousal support had the new circumstances been known at the time of the negotiation. As explained by Wilson J. in Richardson v. Richardson, 1987 CanLII 58 (SCC), [1987] 1 S.C.R. 857, at pp. 869-70 and later endorsed by L’Heureux-Dubé J. in Willick v. Willick, 1994 CanLII 28 (SCC), [1994] 3 S.C.R. 670, different considerations apply to the extent to which an agreement will restrict a court’s jurisdiction to award spousal support versus child support:
The inter-relationship [between spousal maintenance and child support] should not, however, lead us to exaggerate its extent or forget the different legal bases of the support rights. The legal basis of child maintenance is the parents' mutual obligation to support their children according to their need. That obligation should be borne by the parents in proportion to their respective incomes and ability to pay: Paras v. Paras, supra.... Child maintenance, like access, is the right of the child: Re Cartlidge and Cartlidge, 1973 CanLII 844 (ON CJ), [1973] 3 O.R. 801 (Fam. Ct.). For this reason, a spouse cannot barter away his or her child's right to support in a settlement agreement. The court is always free to intervene and determine the appropriate level of support for the child.... Further, because it is the child's right, the fact that child support will indirectly benefit the spouse cannot decrease the quantum awarded to the child.
[68] In this case, the parties agreed to a relatively low level of spousal support that was time-limited. Accordingly, it was in my view an error in principle to award spousal support in an amount higher than the highest amount originally agreed to by the parties and to additionally award ongoing support.
[69] Certainly, the wife is entitled to receive everything that she was owed under the original Separation Agreement in the 1996-1999 period.
[70] In my view, bearing in mind the time-limited foundation of the spousal support clause of the Separation Agreement, it would have been appropriate for spousal support to continue throughout 2000, 2001, 2002 and 2003, during which time the wife’s income was $37,643, $41,818, $46,049 and $45,780, amounts similar to her income in the 1996-1999 period.
[71] In 2004, the picture changed. The wife’s income was $57,273, followed by $66,054 in 2005, $66,043 in 2006 and $75,010 in 2007. It seems to me that by 2004, the wife was self-sufficient and, against the backdrop of the sliding scale and time-limited regime negotiated in the Separation Agreement, no longer entitled to spousal support.
(7) The amount of retroactive spousal support
[72] The parties agree that the amount of spousal support owing for the years 1996 to 1999, on the assumption that the husband had faithfully complied with the original Separation Agreement, is $17,593.20 plus COLA.
[73] With respect to the 2000-2003 period, it is appropriate to use the sliding scale rates of support received by the wife in the 1993-1999 period as a guide for determining a quantum for the subsequent 2000-2003 period. The average of the sliding scale rates from 1993 to 1999 was $988.07 per month which, is an appropriate scale for a retroactive support order in this case. Using this formula, the retroactive spousal support for the 2000-2003 period is $47,427.43 plus COLA.
[74] Accordingly, the application judge erred by awarding the wife retroactive spousal support of $203,000. The proper amount is $65,020.63 plus COLA.
(8) Ongoing spousal support
[75] In a single sentence, the application judge considered the issue of ongoing spousal support, saying “[s]he is owed … $2,000 per month ongoing support.”
[76] There is no basis for this award. The Separation Agreement contemplated that spousal support would cease at the end of 1999. The wife has had precisely the employment she contemplated continuously from 2000 to 2010. She is self-sufficient. Her income in 2009 was $72,240 and in 2010 was $65,000. There is no basis for awarding ongoing spousal support at this juncture.
(9) Costs
[77] The husband contends that the application judge erred in fixing costs at $107,082.50, the amount sought by the wife.
[78] I disagree. The application judge found that the wife’s costs and disbursements, including the substantial disbursement relating to a valuation expert, were reasonable and necessary. The result for the wife greatly exceeded her two offers to settle, thus justifying the application judge’s award of full recovery costs subsequent to those offers. Even with the significant reduction of spousal support on this appeal, the ultimate result is still much better than the offers to settle.
E. DISPOSITION
[79] I would dismiss the appeal on all aspects of the issue of retroactive child support for TC.
[80] I would dismiss the appeal on the issue of the wife’s entitlement to retroactive spousal support. However, I would allow the appeal on the issues of duration and quantum of retroactive spousal support. The wife should receive such support from 1996 to 2003 in the amount of $65,020.63 plus COLA.
[81] I would allow the appeal on the issue of ongoing spousal support and declare that the wife is not entitled to such support.
[82] I would dismiss the appeal relating to trial costs.
[83] In my view, success on the appeal is about equally divided and I would make no order with respect to the costs of the appeal.
“J. C. MacPherson J.A.”
MacFarland and Epstein JJ.A.:
[84] We have read the reasons of MacPherson J.A. We agree with our colleague’s proposed disposition of this appeal save with respect to the duration of retroactive spousal support. We are of the opinion that the application of the strongly worded release in the Separation Agreement to the circumstances under which the Separation Agreement was signed and the ensuing financial circumstances of the parties, do not allow for a spousal support award that continues after the end of 1999, the date when spousal support ends under the terms of the agreement.
[85] We agree with our colleague that the husband, through his deceit, cannot avoid the spousal support obligations he assumed when he signed the Separation Agreement. The wife is therefore entitled to an award of $17,593.20, plus COLA, for the time from when the Separation Agreement was signed to the end of 1999, pursuant to clause 10(2)(a) of the agreement.
[86] Where we part company with our colleague is his conclusion that the wife is entitled to spousal support during the four years from 2000 through to the end of 2003.
[87] First, it is important to note, as did our colleague, that the Separation Agreement was not set aside. Indeed, even after the wife discovered the husband’s breach of his obligations to provide full and complete disclosure, the wife continued to treat the agreement as being in force. She relied upon it in her claim. The trial judge relied upon it in his decision. It is being relied upon, to some extent, in the analysis on appeal of the husband’s child support obligations.
[88] It follows that the only way in which the wife can lay claim to spousal support beyond the end of 1999, is to demonstrate that there has been a material change in circumstances.
[89] With respect, it is unclear what our colleague considers to be a material change in circumstances but, given his view that spousal support should end in December 2003 on the basis that at that point the wife’s income reached a level whereby she was self-sufficient, we assume that he viewed the dip in the wife’s income during the 2000 through 2003 time period as meeting the test for a material change in circumstances.
[90] The test has been set out by the Supreme Court of Canada in Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303, in the context of determining spousal support where the separation agreement provides a release. At paras. 90 and 91, the court states:
The court's focus should be on the agreement's continued correspondence to the parties' original intentions as to their relative positions and the overall objectives of the Act, not on whether a change occurred per se. That is to say, we do not consider "change" of any particular nature to be a threshold requirement which, once established, entitles the court to jettison the agreement entirely. Rather, the court should be persuaded that both the intervention and the degree of intervention are warranted. That is, at this stage, even if unbending enforcement of the agreement is inappropriate, that agreement may still indicate to a trial judge the parties' understanding of their relationship and their intentions. Even an agreement that is not determinative as a result of the parties' circumstances at the time of the application warrants compulsory consideration under s. 15.2(4).
Although we recognize the unique nature of separation agreements and their differences from commercial contracts, they are contracts nonetheless. Parties must take responsibility for the contract they execute as well as for their own lives. It is only where the current circumstances represent a significant departure from the range of reasonable outcomes anticipated by the parties, in a manner that puts them at odds with the objectives of the Act, that the court may be persuaded to give the agreement little weight.
[91] Clause 8(6) of the Separation Agreement provides for the wife’s full and complete release to any claim she may have to support other than the payments agreed upon under the agreement.
[92] This release is followed by clause 8(7) which, for convenience, We will repeat:
The parties realize that there may be future changes in the financial circumstances of the husband and/or the wife, by reason of their health, the cost of living, their employment, financial mismanagement, financial reversals, inheritance or otherwise. No change whatsoever, even if it be material, profound, catastrophic, radical or otherwise, will give the other the right to claim or obtain spousal support, except to the extent provided for the wife in accordance with the terms of this Agreement.
[93] First, in the opening words of clause 8 of the agreement, the wife acknowledged that she has completed her course and obtained employment as a law clerk. The parties expressed their expectation that within a reasonable period of time, the wife’s income would increase. This, in fact, took place during the exact period of time the parties contemplated would be required when they signed the agreement. The subsequent temporary set-back does not, in our view, amount to a “significant departure from the range of reasonable outcomes anticipated by the parties”, particularly in the light of the wording of clause 8, to which both parties, represented by experienced counsel, agreed. That wording makes it clear that a “financial reversal”, even one that is “catastrophic” provides no right to obtain spousal support beyond that which is provided for in the Separation Agreement.
[94] We therefore cannot agree with our colleague’s conclusion that the wife, had she been properly informed of her husband’s financial situation in 1999, would have sought and received ongoing spousal support through to the end of 2003 on the basis that she was able to demonstrate a material change in circumstances.
[95] The wife is to be commended for taking responsibility for her own life by upgrading her training and securing employment as a law clerk. However, as directed in Miglin, she must also take responsibility for the agreement she executed – an agreement in which she acknowledged that no material change, even one that may be regarded as “profound, catastrophic, radical or otherwise, will give the other the right to claim or obtain spousal support, except to the extent provided for the wife in accordance with the terms of this Agreement”. This, in our view, is a fully enforceable provision that provides a complete answer to the wife’s claim for spousal support beyond the end of 1999.
[96] We do not see the husband’s deceitful conduct as impacting this analysis. The husband is being held accountable for the abdication of his commitments to the wife by, among other things, the order requiring him to pay the spousal support owed under the Separation Agreement.
[97] In relying on the Separation Agreement as a bar to a spousal support award that extends beyond 1999, we are mindful that we are in agreement with our colleague that child support should be ordered in an amount based on the child support guidelines, as opposed to the amounts set out in the Separation Agreement. We do not view this as a contradiction. The jurisprudence is clear that while the court should respect the parties’ agreement when it comes to spousal support, in dealing with child support the court may step in. This is particularly true where, as here, the child support agreed upon deviated significantly from the Guideline amounts. See D.B.S. v. S.R.G at paras. 75-79.
[98] We would therefore order the husband to pay spousal support according to the provisions of the Separation Agreement, being $17,593.20 plus an adjustment to reflect COLA. In our view, the wife is also entitled to interest on the arrears of spousal support. We would leave it to the parties to calculate these amounts.
RELEASED: MAY 02 2011 (“J. C. M.”)
“J. MacFarland J.A.”
“Gloria Epstein J.A.”