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May 26, 2020

What you need to know about getting support payments varied during the pandemic

Orders can be varied if court finds a ‘change in the condition, means, needs or other circumstances of the child or either former spouse’

By Laurie H. Pawlitza
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Special to the National Post View original

A global recession, soaring unemployment rates and an uncertain timeline for recovery are among the economic consequences of the COVID-19 pandemic. In the family law world, the ramifications are obvious.

For separated families, monthly child and spousal support is usually based on the income of the higher income earner. Layoffs and terminations inevitably mean that the amounts paid for child and spousal support will have to change.

Child support has two components. The ‘table’ amount — the monthly payment to the primary parent — usually changes annually when the parents exchange tax returns. It is most often based on the prior year’s income from the payor’s tax return.

The second part of child support is paid for “special and extraordinary expenses.” The lower income earner’s income is relevant when it comes to determining the percentage of these expenses each spouse pays. Those expenses include such things as child-care costs required by the lower income earner so that she/he can retrain or work, extraordinary extracurricular activities and post-secondary education or private school.

Spousal support is determined by looking at each spouse’s income, taking into account the child support being paid.

What happens to child and spousal support payments when one or both parents are out of work or when employees whose bonuses or incentive plans can comprise 50-80 per cent of annual income no longer receive anything but their base salaries?

Some family lawyers describe family law as “Forever Law,” because children’s needs change and parents’ financial circumstances change, requiring families to change the original agreement or order to better suit the current situation.

The Divorce Act specifically deals with changes in a family’s circumstances over time by referencing “variations” in the Act. Orders and agreements regarding custody, access and child and spousal support can be varied if the court finds that there has been a “change in the condition, means, needs or other circumstances of the child or either former spouse.”

Once the court has found a change has occurred, the court can vary, rescind or suspend any prior order retroactively or prospectively, but it must take the change giving rise to the variation into consideration when making the new order.

Over the years, a large body of case law has developed, which has interpreted this provision of the Act.

First, the onus on proving the requisite change is on the spouse seeking the change. The court must then find that the change met the threshold: the change must be “material” —  that is, if the circumstance was known at the time of making the last order or agreement, that circumstance would likely have resulted in different terms.

Of course, even if a change is “significant,” if it was actually considered at the time of the original ruling it is unlikely to be deemed material, unless the order specifically stated that when a certain event occurs — such as the payor’s retirement — that it would be a “material change.”

As well, the change cannot be merely temporary.

In short, the change must be “substantial, unforeseen and of a continuing nature.”

A variation application can be very complex. Even if a change is substantial and continuing, it might not meet the threshold: conceptually, a judge is required to look backward — that is, at what the parties intended at the time the last order was made. Whether a change was unforeseen at the time is a fact-based determination.

Second, not every agreement can be varied if there is a material change. Final agreements which either specify a termination date for support or in which the parties release each other from all rights or claims to support, are subject to an entirely different test developed in the case law requiring that a different, higher threshold be met.

Third, unlike other provisions in the Divorce Act, the variation provisions do not allow the court to make a temporary or interim order, which decides the support payable until the parties have a final decision made by a trial judge.

In many jurisdictions, the courts are backlogged and it can be several years before a case is tried. If no interim variation is allowed, the payor may well be paying far beyond his means and may have to default on the support ordered before the change occurred. A spouse who is in default of court orders can be denied the right to even participate in court proceedings. While some judges have found their way around this conundrum, it is far from clear whether those cases are indeed correct.

Fourth, the terms of the agreement or order setting out support obligations matter — a lot. Many agreements say that the support is “fixed and non-variable” so that the arrangement cannot be changed. Others say that the arrangement cannot be changed unless there is a catastrophic change in the payor’s financial circumstances. It will be a difficult question of fact whether a lengthy layoff or the failure to receive an annual bonus for a couple of years will warrant a change to the support ordered when the agreement is fixed and non-variable except in the event of a catastrophic change.

Happily for those former spouses currently in court proceedings who have interim support orders, there is no need to meet the ‘material change’ threshold, as these orders by their very nature can be varied. However, in busy courts, many judges refuse to vary interim orders as interim matters can use valuable court time. Instead, those judges simply order that the matter proceed to trial as quickly as possible.

At the moment, most courts across Canada are currently closed to all but the most urgent matters. That means that even those jurisdictions that did not already have a backlog of cases are likely to see growing wait times once the system fully reopens.

Family lawyers and judges across Canada are bracing for a tsunami of variation applications. Unfortunately, many payor spouses will likely have a long wait before they get relief.

This article originally appeared in the National Post.