Apr 11, 2019

Your ex gets a raise after you divorce? You might be in line for tens of thousands more

By Adam N. Black
Special to the National Post View original

One of the most controversial, difficult and most-litigated issues in family law across Canada is the extent to which a payer of spousal support will be required to share any post-separation increases in income with the support recipient. That issue was squarely before the BC Court of Appeal in a decision released on March 19.

In 2003, following a 17-year marriage, the couple in question separated. In 2004, the parties entered into a comprehensive separation agreement which resolved issues of child and spousal support and division of property.

At the time of the agreement, the husband was employed as an engineering technologist earning an income of $185,000. The wife was unemployed. The agreement required the husband to pay the wife spousal support of $1,400 per month. Spousal support was to be reviewed in 2007, three years after the agreement was signed. Notwithstanding the passage of three years, neither party sought to review spousal support and the husband continued to pay $1,400 per month.

In November, 2016, the husband applied to the court to terminate his spousal support obligation. By that time, he had paid spousal support to his then-former spouse totalling approximately $220,000 over the course of nearly 14 years.

The wife resisted the termination and sought to increase her spousal support retroactive to 2007, when spousal support ought to have been reviewed. The wife took the position that the husband’s income had increased substantially since separation and the amount of spousal support payable to her ought to reflect his new income. According to her expert, the husband’s annual income had increased to approximately $1.2 million as a result of his becoming the CEO of the company for which he worked at the time of separation.

At trial, the judge disagreed with both parties. Justice Ball of the British Columbia Supreme Court ordered the husband to continue to pay spousal support of $1,400 per month until October, 2021, at which time spousal support would terminate. The amount of support was not changed to reflect the substantial increase in the husband’s income.

Underpinning Justice Ball’s decision was his finding that there was no nexus between the husband’s increased income and the arrangements or skills and abilities he developed during the marriage. In fact, notwithstanding the wife’s role of caregiver for the parties’ children throughout the relationship, Justice Ball found that the wife “made no contribution” to the husband’s original training which occurred before the marriage and “made no contribution” to the business for which he worked.

Justice Ball noted that since the husband’s career changed after separation, “his success or failure thereafter is of no relevance.” Justice Ball found virtually no connection between the parties’ marriage and the post-separation change in the husband’s financial circumstances. In Justice Ball’s words: “these are a totally different set of newly acquired executive skills and responsibilities of which (the wife) did not contribute to.”

Both parties appealed from Justice Ball’s decision.

While there were a number of issues before the British Columbia Court of Appeal, the trial judge’s decision to deny the wife’s claim to share in the husband’s increased income was front and centre. Writing for the BC Court of Appeal, Justice Willcock found the trial judge was wrong when he determined that the wife should not benefit from the substantial increase in the husband’s income. Justice Willcock canvassed the case law on whether post-separation increases income should be shared between former spouses by way of spousal support. In particular, Justice Willcock cited a 2010 decision of the BC Supreme Court (2010 BCSC 153) wherein Justice Punnett observed:

“The resolution of the issue of post-separation wage increases is clearly fact based. The principle that appears to emerge from current case authority is that the connection the increase in salary has to the recipient’s contribution during the marriage is determinative. If the increase in salary is founded in expertise and seniority established during the marriage and no intervening event or events are the cause of the increase, then the increase is to be included unless the recipient’s role during marriage necessitates a different determination. If an event after separation is the reason for the increase, in whole or in part, then the increase may be excluded from consideration, also in whole or in part.”

Justice Willcock rejected Justice Ball’s reasoning, noting that it cannot be said that the husband’s increased income through the change in his position at work is not connected to the wife’s contributions during the parties’ marriage. The wife and the husband “made a joint investment in one career” by having the wife “take on the bulk of the caretaking responsibilities with the couple’s children” while the husband “pursued his career outside the home.”

Because of the limited evidentiary record before it, the B.C. Court of Appeal was not in a position to determine the correct amount of support the husband should pay. That determination was remitted back to the trial court for determination on a full evidentiary record. In remitting the matter back, Justice Willcock provided the trial court with direction: “In re-considering the appropriate quantum of support some reference should be made to the guideline quantum and, in particular, the support recommended pursuant to the ‘Without Child Support Formula’ of the Spousal Support Advisory Guidelines.”

The Spousal Support Advisory Guidelines are used throughout Canada to determine the quantum and duration of spousal support. If Justice Willcock’s direction is followed and the husband’s income is determined to be $1.2 million on the basis of a full evidentiary record, the starting point for a proper determination of spousal support may be upwards of $25,000 to $33,000 per month, for an indefinite duration.

This article was originally published in the National Post.