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Spousal Support - A Case Study

December 17, 2020

Saskatchewan

,

Canada

Issue

How do the courts in Saskatchewan treat a post-separation increase in spousal income for the purposes of calculating variations in spousal support?

Conclusion

The treatment of post-separation increases in a payor spouse’s income is ultimately a matter of judicial discretion. That discretion must be exercised in the circumstances at hand and in light of the principles and objectives that govern spousal support. (Linn v Frank).

Faced with a claim for spousal support based on a post-separation increase, a trial judge will consider many factors, including needs, the length of the marriage, the roles adopted during the marriage, and the reason for the income increase. The extent of sharing of these post-separation increases involves a complex, fact-based decision. (Linn v Frank).

A spouse is not automatically entitled to share in an increase in income experienced by a payor spouse. (Savoy v Savoy).

It is usually when support is ordered on a compensatory basis that post-separation increases in income are included in a spousal support calculation. (Meegan v Beaubier).

Law

In Savoy v Savoy, 2017 SKQB 290 (CanLII), Megaw J. relied upon the principles summarized in Thompson v. Thompson, 2013 ONSC 5500 (CanLII), regarding when a post-separation increased in the payor spouse's income should be considered:

[31] A spouse is not automatically entitled to share in an increase in income experienced by a payor spouse. Unlike the situation with child support, an increase in income does not automatically constitute a material change in circumstances. In Thompson v Thompson, 2013 ONSC 5500 [Thompson], Chappel J. outlined the basis upon which a post separation income increase by the payor spouse should be considered:

[103] The authors of the SSAG and the cases decided since the guidelines were introduced have established that the treatment of post-separation increases in a payor’s earnings in spousal support cases is ultimately a matter of discretion for the court, to be undertaken having regard for the unique circumstances of each case and the general factors and objectives underlying spousal support. Upon considering these factors and objectives and the relevant case-law, I conclude that the following general principles should guide and inform the court’s exercise of discretion on this issue:

a) A spouse is not automatically entitled to increased spousal support when a spouse’s post–separation income increases.
b) The right to share in post-separation income increases does not typically arise in cases involving non-compensatory claims, since the primary focus of such claims is the standard of living enjoyed during the relationship.
c) Compensatory support claims may provide a foundation for entitlement to share in post-separation income increases in certain circumstances. The strength of the compensatory claim and the nature of the recipient’s contributions appear to be the major factors which may tip the balance either for or against an entitlement to share in the increased income.
d) The recipient spouse may be permitted to share in post-separation increases in earnings if they can demonstrate that they made contributions that can be directly linked to the payor’s post-separation success. The nature of the contributions does not have to be explicit, such as contribution to the payor’s education or training. The question of whether the contributions made by the recipient specifically influenced the payor’s post-separation success will depend on the unique facts of every case.
e) A spousal support award is more likely to take into account post-separation income increases where the relationship was long-term, the parties’ personal and financial affairs became completely integrated during the course of the marriage and the recipient’s sacrifices and contributions for the sake of the family and resulting benefits to the payor have been longstanding and significant. When this type of long history of contribution and sacrifice by a recipient spouse exists, the court will be more likely to find a connection between the recipient spouse’s role in the relationship and the payor’s ability to achieve higher earnings following the separation.
f) In determining whether the contributions of the recipient were sufficient, the court should consider such factors as whether the parties divided their family responsibilities in a manner that indicated they were making a joint investment in one career, and whether there was a temporal link between the marriage and the income increase with no intervening change in the payor’s career.
g) If the skills and credentials that led to the post-separation income increase were obtained and developed during the relationship while the recipient spouse was subordinating their career for the sake of the family, there is a greater likelihood of the recipient deriving the benefit of post-separation income increases.
h) By contrast, the likelihood of sharing in such increases lessens if the evidence indicates that the payor spouse acquired and developed the skills and credentials that led to the increase in income during the post-separation period, or if the income increase is related to an event that occurred during the post separation period.
i) Assuming primary responsibility for child care and household duties, without any evidence of having sacrificed personal educational or career plans, will likely not be sufficient to ground an entitlement to benefit from post-separation income increases.
j) Evidence that the post-separation income increase has evolved as a result of a different type of job acquired post-separation, a reorganization of the payor’s employment arrangement with new responsibilities, or that the increase is a result of significant lifestyle changes which the payor has made since the separation may militate against a finding that the recipient should share in the increase.

In this case, the basis for the original award was non-compensatory in basis. The recipient did not demonstrate that his needs, means or other circumstances represent a material change in circumstances:

[33] There is no sufficient evidence to establish the petitioner’s needs, means, or other circumstances have changed in such a way as to be considered a material change in circumstances. His actual expenses have not increased. His pension income has increased. It appears his legal and related expenses might have increased. It also appears he continues to struggle with his Canada Revenue Agency indebtedness, as he did at the time of trial.

[34] Those items identified in the Thompson decision have not been shown to be present in the case now before the court. The trial judge carefully reviewed the circumstances in determining both the availability and the quantum of spousal support. There is no evidence those circumstances have changed at all, much less in a material way.

[35] In the result, I am unable to determine there has been a material change in circumstances warranting an increase in the payment of spousal support.

In Savoy v Savoy, 2019 SKCA 1 (CanLII), Richard C.J.S. affirmed the trial court decision, emphasizing that the treatment of post-separation increases in a payor spouse’s income is ultimately a matter of judicial discretion:

[24] [...] The treatment of post-separation increases in a payor spouse’s income is ultimately a matter of judicial discretion. That discretion must be exercised in the circumstances at hand and in light of the principles and objectives that govern spousal support. The Chambers judge was alive to the applicable principles and chose to emphasize that Mr. Savoy’s support was non-compensatory, i.e. needs-based. There was no reviewable error in any of that.

In Linn v Frank, 2014 SKCA 87 (CanLII), the recipient of spousal support cross-appealed the determination of the quantum of spousal support awarded by the Court of Queen's Bench. The trial judge found that the recipient was entitled to compensatory and non-compensatory support, and he imputed income to her of $79,000. The trial judge ordered the payor to pay the recipient $10,000 per month on an indefinite basis. The Court of Appeal held that, when faced with a claim for spousal support based on a post-separation increase in the payor's income, a trial judge will need to consider many factors, including needs, the length of the marriage, the roles adopted during the marriage and the reason for the income increase:

[111] Faced with a claim for spousal support based on a post-separation increase, a trial judge will consider many factors, including needs, the length of the marriage, the roles adopted during the marriage and the reason for the income increase. As the Guidelines indicate, “the extent of sharing of these post-separation increases involves a complex, fact-based decision” (p. 145).

[112] Giguere and Marinangeli are both distinguishable on the facts of this case. In Giguere, a decision at first instance, the trial judge found that the husband’s raise was “given to him as a result of the tremendous effort he had put into the company from the outset, when the parties were still residing together” (para. 18). In Marinangeli, the Court of Appeal declined to reverse a trial judge’s decision fixing a retroactive spousal and child support order calculated based on an increase in the payor’s income. The Court found no basis to overturn the trial judge’s finding that the payor’s continued success was as a result of the recipient’s assistance during the marriage.

[113] Critically, in the within appeal, this Court is faced with a finding that Mr. Linn’s post-separation income was not as a result of any contribution by Ms. Frank. Thus, in order for Ms. Frank to succeed, this Court would have to find that the trial judge misapprehended the evidence in reaching this conclusion or that it was clearly wrong. Upon review, it is clear that this Court can make neither statement. It was open to the trial judge to draw the inference that the increased funds were as a result of an amalgamation of John Deere businesses driven by the acumen of Mr. Linn and his business partners.

In Giguere v. Giguere, 2003 CanLII 64335 (ON SC), at the date of separation. the husband's annual income was $72,962. Since the separation, it has increased to $132,000. The wife's income was $34,372. Throughout the marriage, both contributed financially. For at least the last decade of cohabitation, the husband earned substantially more than the wife. The husband's travel and work responsibilities meant that the wife was the primary caregiver for Robbie and, in addition, assumed most of the household responsibilities. The wife considered caring for Robbie part of her role and tried to make things easy for the husband so that he had no distractions at home. The trial judge found that

[20] The issue is whether the wife should be relegated to a standard of living enjoyed during the marriage when the husband enjoys a much higher standard of living as a result of a substantial raise which he received less than a year after the separation. I find that she should not. Many of the cases upon which the husband relied in arguing that her standard of living ought to be that enjoyed during the marriage simply did not deal with the issue of a substantial increase in the payor's income post-separation. In addition, most of those cases were more than ten years old. Many dealt with the issue of whether a wife ought to be relegated to the standard of living she would have experienced, had she never married. In other words, the standard of living argument revolved around whether the wife should be able to continue an increased standard of living she would not otherwise have enjoyed.

[21] More recent cases have entitled a wife in a long-term marriage to increased support flowing from the husband's post-separation increased income. One such case is Francis v. Baker (1997), 1997 CanLII 12242 (ON SC), 150 D.L.R. (4th) 547, 28 R.F.L. (4th) 437, [1997] O.J. No. 2196 (Ont. Gen. Div.), Francis v. Baker (1998), 1998 CanLII 4725 (ON CA), 38 O.R. (3d) 481 (Eng.), [1998] O.J. No. 924 (Ont. C.A.) where the Court of Appeal upheld an award of lump sum spousal support of $500,000 made 12 years after the separation. At trial, the judge had found that Mr. Baker's wealth "seems to have erupted when he became C.E.O. of Seven-Up Canada Inc.", an event which occurred a few years after separation. At para. [44], the trial judge found:

[44] … With the clear discrepancy that existed in the incomes of the spouses very shortly after the separation, she would have been entitled to "top up" support.

[22] In the recent decision of Rozen v. Rozen, [2003] B.C.J. No. 1486 (B.C. S.C.), the judge refused to increase a wife's support on the basis of the husband's substantial increase in income following separation. That case is not binding upon me and it can be distinguished. At para. [17] of the decision, Chamberlist J. found that the substantial increase in income occurred "by reason of a re-organization of [the husband's] accounting firm and additional work being required of him". The additional income was not, in the judge's view, related to the breakdown of the marriage or the sacrifice made by the wife during marriage.

[23] The husband also argued that the wife was not entitled to compensatory support. Again, I disagree. In Keller v. Black, 2000 CanLII 22626 (ON SC), [2000] O.J. No. 79 (Ont. S.C.J.), a case upon which counsel for the husband relies, the wife earned more income than the husband in all but the last two years prior to separation. Both parties achieved post-graduate degrees during cohabitation. The wife's need for support arose from her ill health.

[24] In Francis v. Baker, supra, in rejecting Mr. Baker's argument that Ms. Francis had suffered no economic loss as a result of the marriage or its breakdown, Benotto J. said, at para. [43]:

[43] … To say that her child raising responsibilities did not affect her career earning potential is naïve. One cannot possibly devote her time to the children, as she has, while achieving maximum potential. Ms. Francis is a bright woman. I have no doubt that her career path would have been entirely different and more lucrative but for the children. As stated by Madam Justice L'Heureux-Dube, in circumstances such as this, the sacrifices made by the mother catch up with her and confer a benefit on the father who is able to focus his attention outside the home. (Moge v. Moge, 1992 CanLII 25 (SCC), [1992] 3 S.C.R. 813.)

[25] Ms. Giguere is entitled to compensatory and needs-based support. Her income is $34,372 according to her most recent pay stub. The husband's income, including the free use of a car, is $140,000. I do not agree with Mr. Merrifield that their incomes ought to be almost equalized. The support order I make must take into account the substantial effort Mr. Giguere makes to earn the income that he does. I conclude that a support award of $3,000 per month is appropriate in the circumstances. This gives Ms. Giguere approximately 42 percent and Mr. Giguere approximately 58 percent of the net disposable incomes of the parties. That seems to me an appropriate division in the circumstances of this case.

In Meegan v Beaubier, 2013 SKQB 85 (CanLII), Wilson J. considered the appropriate and quantum of an interim spousal support award. The parties were together for 11 years, and there were no children of the marriage. The husband's income increased substantially the year after the parties separated. Wilson J. held that as the basis for support was non-compensatory, the post-separation increases in income should not be considered in determining quantum:

[19] In 2010, when the parties separated, the husband’s income was the sum of $190,362.00. The wife’s income was the sum of $77,425.00. I am accepting, on this interim motion, that post-separation increases in income of either party should not be considered on the basis that there is no evidence that the husband’s increased income or the wife’s increased income has a connection to the marriage. It is usually when support is ordered on a compensatory basis that post-separation increases in income are included in a spousal support calculation. (Fisher v. Fisher, 2008 ONCA 11, 288 D.L.R. (4th) 513)

In Dungey v Dungey, 2019 SKQB 34 (CanLII), Smith J., following Linn v Frank, 2014 SKCA 87 (CanLII), held that there is no absolute rule on determining whether to consider a post-separation increase in the income of the payor, and therefore each trial judge must determine what is equitable and just in the circumstances. As a result, Smith J. found that the average of four years of the income for the payor gave the fairest number for the calculation of spousal support:

[63] In sum, I take solace that there is no absolute rule and I should choose the time that I think is equitable and just in the circumstances.

[64] As I have observed, the parties have, more or less, lived separate and apart since 2008, although there was no formal separation until 2014. Any success enjoyed by the company in the last 10 years has been a direct function of the acumen of the petitioner. Having said that, the parties had an enviable lifestyle and any decision on spousal support must not harshly strip away from the respondent the perquisites that accrue to the wife of a successful businessman.

[65] As noted, the respondent had an expert report prepared with respect to the petitioner’s income (R-2). It is of little assistance as it did not take into account the restrictions of taking cash from the company as required by Canadian Tire and as discussed in paragraph 55 and following herein. The respondent does argue that for the purpose of determining spousal support an average of the current three years should be used. Respectfully I disagree. The parties separated in 2014 and were arguably de facto separated since 2008.

[66] The petitioner submits that an average of three years (2011 to 2013 inclusive) should be used to establish his income. That average would equal $520,421.

[67] I decline to be restricted to three years. In this instance I think an average of four years, 2013 to 2016 inclusive, gives us the fairest number.

In B.J.L. v D.B.L., 2018 SKQB 213 (CanLII), Brown J. considered whether B.L. was entitled to an award of spousal support, and if so, in what amount and for what duration. D.L.'s income increased considerably after the parties separated. Brown J. found that one of the keys to the success of D.L.'s business was B.L.'s commitment to caring for the children, during the relationship and after its breakdown. This enabled D.L. to focus time and energy on making the business a success. Therefore, Brown J. concluded that D.L.'s post-relationship income is appropriately considered for the purposes of spousal support:

[189] I once again rely on Linn v Frank, 2014 SKCA 87, 442 Sask R 126 [Linn] for the underlying reasoning on this issue. At para. 110 Justice Jackson noted that an analysis is required in either instance, whether relying on date of separation income or a subsequent timeframe.

[190] Here there is an entitlement to both compensatory and non-compensatory spousal support. I have found that one of the keys to the success of Hytta was D.L.’s ability to spend so much time and energy making it the effective farming business it is. This was only possible due to B.L.’s
similar commitment to caring for the children, both during the relationship and after it was over.

[191] I therefore conclude that D.L.’s post-relationship income is appropriately considered for the purposes of spousal support here. If he were to have had substantial child care obligations during and after the relationship things would look differently for Hytta. Thus it is appropriate to rely on his income after the relationship ended and during the time period for which support is still considered owing.
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