Our BC Court of Appeal discussed the difference between an application for review of a spousal support clause (in an agreement or court order) and variation of a spousal support clause under section 17 of theDivorce Act in the decision of Domirti v. Domirti, 2010 BCCA 472 .
A review clause is often used when there is some uncertainty about whether spousal support should be continued, and, if so, in what amount. This is particularly germane to situations where a spouse has been out of the workforce for some time and it is uncertain what type of job/income s/he will be able to obtain in future. Rather than making a permanent support order, parties can agree, or courts can order, spousal support be reviewed within a certain period of time (i.e. in two years time). See: Schmidt v. Schmidt, 1999 BCCA 701.
A permanent support order means spousal support is ordered at a specific quantum (for example $1,000 per month) and for a particular duration (for example, 15 years). To change the amount or duration of support, either spouse is required to meet the threshold test of a material change in circumstances. A material change must be significant and long-lasting and cannot have been contemplated by either spouse at the time the agreement/order was made. An example of a material change is if the paying spouse became disabled and was unable to work. This is a significant and long-lasting change that will likely impact the paying spouse’s income and ability to pay support.
At a review application, unlike at an application to vary an order/agreement, the court will take a fresh look at whether the spouse receiving support should continue receiving it. As a result, there is no obligation on either spouse to establish a material change in circumstances to embark on the review of a spousal support clause. The only requirement is that the review period has lapsed. A review clause does not mean that support terminates once the review period has lapsed.
The correct approach on an application for review of spousal support is discussed in McEachern v. McEachern, 2006 BCCA 508, which was recently upheld in Scott v. Scott, 2008 BCCA 457. Justice Prowse, writing for the Court of Appeal in McEachern, supra, held that once the conditions precedent in a review clause have been satisfied, the next step is for the court to apply s. 15.2 of the Divorce Act, taking into account the spousal support clause as one of the relevant considerations.
The primary factors to be considered under s. 15.2(4) of the Act are: the condition, means, needs and other circumstances of each spouse including the length of cohabitation, the functions performed by each spouse during cohabitation and any order, agreement or arrangement relating to support.
The objectives set out in s. 15.2(6) are: recognition of any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; apportionment of any financial consequences arising from the care of any child of the marriage; relief of economic hardship resulting from the breakdown of the marriage; and promotion of economic self-sufficiency of each spouse within a reasonable period of time.
In summary, the court’s analysis will usually come down to two considerations:
i) has the spouse been adequately compensated for the economic/career disadvantages resulting from the breakdown of the marriage; and
ii) does s/he still have financial need, meaning is s/he self-sufficient to the point where the two spouses’ quality of life are roughly equal.
If the answer is “no” to the first question or “yes” to the second question, the court will usually find that the receiving spouse still has entitlement to on-going support. However, if the answer is “yes” to the first question or “no” to the second question, there is a good chance any on-going support will be terminated.
A spousal support review can be costly if the spouses must return to court to have the issue of on-going support decided. Further, courts have generally discouraged spousal support reviews because a review clause does not provide the separating spouses with certainty and finality to their affairs.
If there is a lot of uncertainty about a spouse’s ability to pay support or the recipient spouse’s future income or ability to become self-sufficient, a review can be a useful way to “wait and see”, without having to prove a material change in circumstances later on if either spouse seeks to change the terms of the spousal support order/agreement.