Court File and Parties
COURT FILE NO.: FC-12-1906-1 DATE: 2016/10/21 SUPERIOR COURT OF JUSTICE (FAMILY COURT) – ONTARIO
RE: THOMAS CHARLES CHARLETON, Applicant (Responding Party) - AND- LOUISE CHRISTINE COBURN, Respondent (Moving Party)
BEFORE: Justice Calum MacLeod
COUNSEL: Yanik S. Guilbault, counsel for the Respondent (Moving Party) Gil D. Rumstein, counsel for the Applicant (Responding Party)
HEARD: July 28, 2016
Endorsement
[1] Ms. Coburn seeks an increase in spousal support from her husband Mr. Charleton because his income has increased sufficiently to trigger the variation provisions of their detailed minutes of settlement as incorporated into a court order. The order in question is a final order granted by this court on May 22, 2014 following a settlement conference. The motion was necessary because the parties disagree whether the increase in income is sufficient to constitute a material change within the meaning of the order and, if so, they disagree on the appropriate amount of spousal support.
[2] The motion was argued in July and I reserved my decision to consider the matter further. It would have been relatively simple to deal with the merits of variation but upon review of the materials I encountered a significant question of jurisdiction which, quite frankly, neither I nor counsel had considered during oral argument. This required further submissions and because it is an important practice point, written reasons seemed necessary.
[3] There is no doubt that when the parties signed the minutes of settlement and when the judge incorporated those minutes into an order, they intended the order to be a final order dealing with spousal support. And there is no doubt that a term of the minutes and a term of the order provided for variation. The jurisdictional issue arises because the order did not dispose of all of the relief claimed in the original application. There was a subsequent final order dealing with the property issues but significantly, and for entirely legitimate reasons, the divorce was deferred. This creates uncertainty concerning my jurisdiction to entertain a motion to change.
[4] For the parties involved, a jurisdictional question that requires parsing of statutory language and consideration of the interrelationship between federal and provincial legislation will appear unnecessarily technical and academic. I cannot ignore it, however, because though family law may be infused with principles of equity and fairness, the jurisdiction of the courts in matters of separation and divorce is purely statutory. I have concluded that I cannot proceed under s. 17 of the Divorce Act.
[5] After consultation with counsel, I have adopted a mechanism to cure any apparent problem and I have proceeded to decide the variation motion on the merits pursuant to s. 37 of the Family Law Act. This has required some procedural gymnastics to which counsel have either consented or agreed not to oppose.
[6] For the reasons that follow, I am increasing the amount of spousal support to reflect the increased ability of the husband to pay support. On the other hand, I have not automatically ordered a percentage for percentage or dollar for dollar sharing of the increased salary as I have concluded that the spousal support is primarily needs based rather than compensatory in nature.
Background
[7] A brief background is required. The basic facts are these.
[8] The parties were married on December 10, 1996 and separated on January 17, 2011. They had no children. They had cohabited for a period of time before the marriage but disagree on the number of years. Perhaps it was a gradual transition. The parties were certainly in a relationship by April of 1992 (the date the applicant alleges). They purchased a home together later that year but the applicant retained an apartment until October 1993 when he concedes the parties began to cohabit full-time. In any event, the parties were together for somewhere between 17 and 19 years before they separated.
[9] During the period of cohabitation both parties worked, but in 1996 the respondent accepted a separation package from Bell Canada and decided to attend the Ottawa School of Art. Although art was her passion, it never developed into a career. Subsequently, in 1999 the parties moved to France because the applicant accepted work which took him overseas. After they returned to Canada the applicant worked at a call centre in Belleville, Ontario but she left that employment in 2004 when she became ill.
[10] It is common ground that the applicant is now disabled from working because of her illness. The parties separated in January of 2011 and in August of 2012 the applicant began legal proceedings for a divorce and corollary relief. As set out above, the parties negotiated terms of a final order dealing extensively with the issue of spousal support. Divorce was not granted and currently the parties remain legally married. This provides the respondent with ongoing access to medical benefits without which her medication costs would be substantial.
[11] For purposes of this motion, the Court has the benefit not only of the minutes of settlement and the final order, but also affidavits detailing the basis of settlement. The parties have thereby waived settlement privilege. The evidence includes the Spousal Support Advisory Guidelines (SSAG) used at the time, affidavits from the parties and an affidavit from the former lawyer for the applicant. There has also been questioning.
[12] The critical features of the settlement as reflected in the minutes and the order are as follows:
a) The parties agreed that the respondent was entitled to spousal support for an indefinite period of time subject to variation if there was a material change in circumstances. The support was to terminate on the death of the respondent and providing his obligation was secured by a policy of life insurance, would also terminate on the death of the applicant. b) The quantum of support they agreed upon was derived by taking the mid-range of the SSAG calculated by using the applicant’s average income for 2011-2013 (including bonuses) of $158,394 and assuming cohabitation for 18 years. Support was set at $3,817 per month. c) The parties agreed that “should the applicant’s income change by $20,000 or more, this shall be considered a material change in circumstances”. They also prescribed other events that “may be” a material change in circumstances including a change in “either party’s financial position”. Finally they agreed that a material change could be considered “even if it was foreseen or foreseeable” d) The parties were to exchange their Notices of Assessment each year, upon request, by June 1 of each year.
[13] The issue of divorce and certain property issues remained before the court. There was another flurry of court activity in 2015. A further temporary order was signed by Justice Doyle on June 26, 2015 and another final order by Justice Sheard dated October 13, 2015. These were also consent orders, but they are not the subject of the motion. However, it is worth noting that they dealt with the proceeds of sale of the matrimonial home. The respondent received approximately $240,000 and the arrears of spousal support. The divorce itself was adjourned “to allow the respondent…to remain beneficiary of the applicant’s health provider” for as long as he remained employed by his current employer. That remains the situation today. While the parties agree the separation remains permanent, they remain married and have deferred the divorce for financial reasons.
[14] In summary, the parties have settled all issues between them and included them in final orders but a divorce has not yet been granted. The claim for divorce has not been dismissed, it is simply adjourned for the time being.
Jurisdiction
[15] The jurisdictional issue arises because of the absence of a divorce. Both the federal and provincial governments have enacted legislation dealing with spousal support. The jurisdiction of the provincial government in this area arises from its exclusive jurisdiction over matters of property and civil rights, whereas the jurisdiction of the federal government to deal with these matters is ancillary to its jurisdiction over marriage and divorce.
[16] Ordinarily this poses no problem. Unmarried spouses or spouses who are not seeking divorce can have recourse to the support provisions of the Family Law Act. Married spouses who are divorcing or who have been divorced will be dealt with under the Divorce Act. Section 36 of the Family Law Act provides that any application for support under that Act that has not been adjudicated is stayed upon the commencement of a divorce proceeding unless the court orders otherwise.
[17] There is no doubt that the power to legislate in the area of divorce also includes the power to provide for corollary relief. But there is a question whether or not the court may grant a final corollary relief order if a divorce has not been granted. I do not have to answer this question. Ordinarily the court should resolve any ambiguity in the wording of the Act in a manner in keeping with the objectives of the legislation and, whenever possible, an interpretation permitting the federal and provincial legislation to work in harmony. Generally an order for corollary relief should be viewed as valid if it is made in the context of a valid divorce proceeding and unless forced to that conclusion, I would be reluctant to find that the validity of the order depends on the timing of the divorce itself. Of course it is perfectly valid to make a temporary order for corollary relief. A potential problem arises when the parties seek a final order and defer the divorce as was done here.
[18] For reasons which will follow, it is not necessary for me to resolve the question of whether it is possible to make a final corollary relief order in advance of a divorce judgment. I will simply note that several learned authors and certain decisions of the British Columbia Supreme Court state bluntly that a final corollary relief order granted in advance of a divorce is invalid and made without jurisdiction: Choicoine v. Choicoine, 2007 BCSC 735 at paras. 47 – 51, Pfann v. Pfann, 2008 BCSC 409 at para 32. There is a contrary decision of this court (dealing with custody and not support) but in that case the problem was cured because the divorce was eventually granted: Bridgeman v. Balfour, 2012 ONSC 5535 at para. 10.
[19] Regardless of the validity of the order if made under the Divorce Act, there is no question that I lack jurisdiction to vary the order in question under s. 17 of that Act. That is because s. 17 (1) (a) of the Act specifically permits “former spouses” to make an application to vary a support order. No principle of statutory interpretation is available to permit the court to act in the face of clear statutory language. It is only former spouses who have access to s. 17.
[20] This is not a good outcome for the parties who intended to incorporate their agreement in a final order. Unless I grant remedial procedural relief, then one of three possibilities would exist. Firstly, the final order may be valid providing the divorce is eventually granted and it would then be subject to variation under s. 17 once the parties are divorced. This would defer the inevitable. The parties have already agreed on the conditions which make the order variable and if the question is deferred, the eventual variation order may be made retroactive. The same would be true if the order is held to be invalid because the invalidity of the order would not invalidate the minutes of settlement themselves.
[21] A second possibility is that I could treat the order as a temporary order under s. 15.2 (1), but a temporary order cannot be varied under s. 17, and the variation of a temporary order engages different considerations than the variation of a final order. It was the clear intention of the parties and of the court that the order be a final order and that it be subject to variation only for material change. There is a presumption of validity of a court order, particularly an order carrying into effect an agreement between the parties and implementing a settlement. The court should, therefore, seek a solution to give effect to the order and to the settlement.
[22] A final possibility is that I could deem the final order to be an order made under the Family Law Act. Unfortunately, neither of the parties checked the box to plead this relief in the application for divorce or the answer so I would have to retroactively amend the pleadings, lift the stay and then declare the order to be a final order for spousal support under the provincial legislation. Admittedly that is somewhat convoluted but it is ultimately procedural relief to avoid what is really a technical problem. Certainly neither party wishes the order to be set aside.
[23] I canvassed this potential remedy with counsel. Counsel for the respondent requested that I grant such an order. Counsel for the applicant advised that his client would not resist the order. Both parties wish the variation motion (which was argued as if s. 17 applied) to be determined on the merits. Accordingly I am making the necessary order so that the order of May 22, 2014 will be treated as a final order under the Family Law Act.
[24] I pause to observe that this situation arises frequently and is particularly common in the Family Branch which exercises unified family jurisdiction. Parties frequently settle the corollary relief issues and request final orders dealing with child support, spousal support and property issues while permitting the divorce to proceed on a consent basis or an uncontested basis. For various reasons, divorces may be deferred. Sometimes, as in the case at bar, this may be to avoid a negative financial consequence in relation to benefit plans. In other cases, the party that was supposed to proceed to obtain the divorce never gets around to it or does not wish to incur the cost. Seldom do the parties or the court turn their attention to the question of what happens if the order has to be varied before the divorce is granted or what legislation is the basis for the order. The case before me is an illustration of why it would be prudent to approach the matter with greater precision in future.
[25] To cure the problem inadvertently created in this case, there will be an order nunc pro tunc amending the pleadings to claim concurrent relief for spousal support under the Family Law Act. There will also be an order lifting the stay under the Family Law Act and deeming the order of Justice Beaudoin to be a final order made under that statute. This is consistent with the intention of the parties and the court that the issue of spousal support be finalized, and with their decision to remain married for the time being.
[26] I turn now to the merits of the motion.
The grounds for variation
[27] The motion to change spousal support was launched in June of 2015 while the motions in the original divorce proceeding remained ongoing. The triggering event was disclosure of the applicant’s 2014 (and now 2015) income. In 2014 the applicant earned $182,873. It appears he earned $182,092 in 2015. Of course this is an increase of more than $20,000 from the figure of $158,394 per year used to calculate spousal support in the minutes and the resulting order. It is just over $20,000 more than the figure of $161,314 which was his actual income in 2013.
[28] While the applicant husband argues that these increases in his income do not constitute a material change, I cannot accept that argument. In arriving at their settlement, the parties had agreed to use a three year average to establish the income of the applicant and it was this average that was used to generate the SSAG printout that was the basis for the amount of support. The reason for this was because at the time, the applicant was concerned about the financial health of his employer and the possibility that his 2014 income might be anomalously high. This has not proven to be the case and I cannot agree that either the minutes or the order bear the construction that an increase of $20,000 per year was in future to be determined by comparing three year rolling averages. I find that the applicant’s income has increased by $20,000 and, therefore, pursuant to the terms of the order there has been a material change. This opens spousal support to review.
[29] In L.M.P. v. L.S., the Supreme Court of Canada endorses the practice of parties agreeing on circumstances that will constitute a material change. This allows parties settling support claims to consider future circumstances and to predetermine who will bear the risk of any changes that may occur. Accordingly, provisions identifying when a material change will or will not constitute a material change are to be given weight because they demonstrate whether or not the original order was intended to capture the particular changed circumstance. An increase of $20,000 per year added to an income of either $158,394 or $161,314 per year is material.
[30] The respondent wife seeks an increase to the amount of $4,691 per month from the current $3,817 per month. This is the midpoint of the Spousal Support Advisory Guidelines based on the current income and assuming cohabitation of 18.83 years. It would also represent approximate equal sharing of the increased salary – roughly $1 for each $2 of the increase before taxes. Different numbers are generated for SSAG tables if investment income is included or if cohabitation of 17 years (the length of time used at the time of settlement) is utilized.
[31] There are several reasons why this approach is not appropriate. Firstly the SSAG is not binding although it must be considered. Secondly, disability cases may be exceptions to the SSAG in any event. Thirdly, this is a variation.
[32] While L.M.P. v. L.S. dealt with variation under the Divorce Act, the principles are similar under the Family Law Act. The Supreme Court has said that on a variation of a spousal support order, the objective is to determine the appropriate change required as a result of the material change. It is not a review of support de novo. The Court adopted the analysis in Miglin that judges making variation orders limit themselves to making the appropriate variation but do not weigh all of the factors required by s. 15. Moreover, the analysis is the same whether the original order was the result of adjudication or of a settlement. In either case, unless a party is seeking rescission, there is a presumption that the original order was correct and in accordance with the objectives of the Act. There is no reason not to apply the same analysis to an order under the Family Law Act.
[33] This analysis is to a very large degree a complete answer to reopening questions such as the length of cohabitation or the basis for calculating the income of the applicant. The fact that the parties agreed to support based on compromises about the length of cohabitation and the three year average of the applicant’s income is commendable. It permitted a consensual resolution. The fact that they agreed upon quantum of support generated by using the mid-range SSAG generated by that compromise should not now be second-guessed. In adopting the minutes of settlement and incorporating them into a final order, Justice Beaudoin must have concluded that the terms of the order were in compliance with the SSAG and the objectives of spousal support.
[34] The SSAG numbers are of course “advisory guidelines” which suggest ranges. There is no magic to the number of years of cohabitation. It is true that changing the inputs changes the SSAG calculations. However, the amount the parties originally agreed upon could have been ordered by the Court regardless of whether there was a finding that cohabitation had persisted for 19 years, or only 17. It is not open to the parties to reopen that issue.
[35] Having regard to the impact of the change, it provides the support payor with a slightly greater ability to pay support. Over the same period of time, the support recipient’s needs may have increased if only to accommodate the increased cost of living. As noted above, her financial statement now shows a modest monthly deficit. I agree with counsel for the applicant that it is not automatic that an increase in the ability to pay support should generate a similar dollar-for-dollar percentage increase in the level of support. Nor can it be inferred from the order that the parties have agreed that mid-range SSAG numbers will always be appropriate.
[36] It is here that the question of compensatory support and non-compensatory support becomes potentially important. That is because compensatory support is based on an unjust enrichment analysis. If the spouse who is receiving the support sacrificed her earning potential to contribute to the payor spouse’s earning capacity for example, then this justifies significant sharing of post-separation increases in income. Non-compensatory support, by contrast, is based on a needs and ability to pay analysis. Just because the ability to pay has increased does not automatically mean that the support should be increased unless there is a commensurate increase in the real need of the support recipient.
[37] I am asked by counsel to determine the basis on which indefinite support was ordered, though the parties themselves did not define this in the minutes of settlement and there was never adjudication on the point. There is evidence that the respondent left her employment at Bell Canada to pursue studies in art. She did move to France with the applicant for a period of roughly two years, but this did not interrupt employment. She ceased working eventually because of her illness. She is now disabled and, in all probability, requires support for the rest of her life. There were no children of the marriage. There is little evidence to support a compensatory model, but very strong evidence to support ongoing need. If I had to categorize the spousal support entitlement on the evidence before me, it would appear to be more probable that support is justified by need than by disadvantage arising from the marriage.
[38] These are not, of course, watertight compartments. Here again, it is not appropriate to go behind the consent order. It was not necessary for either the parties or the Court to rigidly define the basis for support. As the Supreme Court has stated in Moge and again in Bracklow s. 17 (7) of the Divorce Act contains four factors that must all be considered in making an initial support order. It is an error to give one factor prominence over the others. Courts need not decide on one basis of support to the exclusion of the other but should apply the relevant factors and strike the balance that best achieves justice. I would adopt the same approach to determination of support under the FLA. The criteria in s.33(7) include the criteria of recognizing each spouse’s contribution to the relationship, the economic consequences of the relationship, making fair provision to assist a spouse to contribute to his or her own support and relieving financial hardship. These factors need not be examined afresh on a variation motion.
[39] It is clear that at the time of the order, the parties agreed to a mid-level SSAG award, that support would be reviewed if and when the applicant’s income increased and that support would be indefinite in recognition of the inability of the respondent to become self-sufficient through employment.
[40] The question then is what effect should the increase in income have on the level of support. This is not a dramatic post-separation increase arising from new employment, promotion or other factors far removed from the marriage itself. Rather this is precisely the kind of increase in income the parties anticipated the applicant might receive. And they agreed that increases of at least $20,000 would trigger a review of support. It is not unreasonable for the support to be increased.
Decision
[41] For the reasons enunciated above, I will not go behind the consent judgment and decide questions that were resolved without adjudicating them at the time. While the support agreed to in respect of a disabled spouse appears to engage a needs analysis rather than a compensatory analysis, I cannot say there is no aspect of the latter. These are not distinct watertight categories.
[42] In my view, a fair increase would be $500 per month. This would increase the current support from $3,817 per month to $4,317 per month retroactive to January 1, 2015. This achieves a number of things. Firstly, it permits the respondent to share some of the increase in salary but does not require the applicant to share it equally dollar-for-dollar. Secondly, it more than addresses her declared monthly deficit. Lastly, the resulting amount is within the range of the SSAG regardless of how long the period of cohabitation lasted, and is close to the mid-point if the same number is used as was used to calculate the original support amount.
[43] I am not imputing income to the respondent. The sale of the home, equalization and division of assets were all readily foreseeable when the parties agreed on the quantum of support. There is no basis for assuming that the sale of the home was a windfall or that it significantly affected the position of the parties.
[44] In conclusion, there was a material change in circumstances when the applicant’s income rose by more than $20,000. For the reasons given above, there will be an order varying the support ordered by Justice Beaudoin to $4,317 per month effective January 1, 2015 and continuing until further order or agreement.
[45] As set out above, the pleadings are amended nunc pro tunc to include a claim for spousal support pursuant to the FLA. As the divorce has been deferred, the stay on the claim for support under provincial legislation is lifted as of the date of the order and the order is deemed to have been a final order under the Family Law Act rather than a corollary relief order under the Divorce Act.
Costs
[46] Counsel may arrange to speak to costs if they are unable to reach agreement within 15 days.
Mr. Justice Calum MacLeod Date: October 21, 2016