Just when we thought spousal support issues were becoming clearer, another curveball comes our way.
In 2009, the B.C. Court of Appeal came out with an important decision in cases where the payor's income exceeds the spousal support advisory guidelines cap.
In the case, Bell v. Bell, the parties were married for most of their roughly 20-year relationship. The husband, John Peter Bell, was a retired diplomat who met his wife while serving as the Canadian ambassador to the Ivory Coast. Yvette Holland Bell, who was in the fashion industry, had minimal assets while John was worth approximately $4 million.
Yvette left her career to raise the parties' two children and to perform the many duties that go along with being a diplomat's wife. After separating in 2004, the parties reached an agreement that then became a consent order. John was in his late 60s and Yvette in her late 40s at the time.
Through the separation process, the pair split the matrimonial assets, totalling about $12 million, equally. The parties agreed that Yvette would receive $10,000 in monthly spousal support and $5,000 per month in child support. A review clause in favour of John was incorporated into the agreement allowing him to have spousal support reviewed when he turned 70, an age he reached last year.
The judge of first instance reviewed John's income and determined that it had dropped to approximately $350,000 from the $1.2 million he was earning at the time of the agreement. The court further found that Yvette's income was $180,000 plus $30,000 in imputed income that she admitted she could earn if she went back to work. As a result, the court ordered immediate termination of spousal support. Yvette appealed.
In reviewing John's income, appeal court Justice Peter Lowry, speaking for a unanimous panel of judges, found it was actually $650,000 for the purposes of calculating support. He then continued to discuss the basis for awarding spousal support to Yvette, noting there is a compensatory element.
While Yvette received a very lucrative property settlement, she was entitled to those assets regardless of any spousal support. The compensatory element stemmed from the disadvantage she would suffer from the breakdown of the marriage given that she would face a lower standard of living following the separation. Lowry held that in order to maintain a similar quality of life to what she enjoyed during the marriage, Yvette would have to deplete her capital, a result not in keeping with the compensatory principles of support.
Placing much weight on the significant discrepancy between the litigants' incomes, Lowry reversed the lower court's decision to terminate spousal support. What is interesting, however, is that notwithstanding the significant focus by the appeal court on the need to maintain similar standards of living, the judges did not reinstate the previous amount of $10,000 per month. Instead, Lowry cut the amount in half, finding that the parties had agreed to the $10,000 payments based on a much higher income for John. Now that his income was approximately half of what it had been previously, the court lowered Yvette's spousal support from $10,000 to $5,000 per month.
Why this is interesting is that with this award, Yvette's income would still only be $270,000 annually. Meanwhile, John enjoyed an income of $650,000, an amount that falls to $590,000 annually after paying support. That still leaves a $320,000 difference notwithstanding the 20-year relationship and the very high standard of living the couple enjoyed before separation. That's not exactly a balancing of standards post-separation.
In making their ruling, the judges placed much weight on the original agreement and on what the parties had deemed as fair. While on the face of it, this approach makes sense, it lends itself to asking what would have happened if John had simply gotten a good deal on spousal support in the original agreement. What if Yvette had agreed to the amount simply to avoid litigation, not because she thought it was fair? Can it still be said that cutting her support in half was appropriate given that John could certainly afford to continue paying the higher amount and in light of the court's finding on balancing standards of living?
Had the original amount continued, John would still have enjoyed a much higher standard of living than his ex-wife. As a result, it would be interesting to know whether the decision would have been the same had the original payments been the result of a trial judgment rather than an agreement. Considering this decision, then, it may be prudent to put more emphasis on purpose and intention clauses in agreements.
Marta Siemiarczuk is a lawyer practising family law litigation and collaborative family law at Nelligan O'Brien Payne LLP in Ottawa. She can be reached at email@example.com
[This article is reprinted with permission and first appeared in the September 2009 issue of The Law Times.]