April 24, 2017 By: Marta Siemiarczuk Read Time: 4 minutes
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This article was originally published in Law Times on April 24, 2017.

A recent case involving a motion to change spousal support is important to Ontario practitioners because it contains a good analysis of the use of Spousal Support Advisory Guidelines in support reviews and deals with the crossover between equalized pension income and unequalized pension income.

The case of Slongo v. Slongo, 2017 ONCA 272 involved two parties, Pamela Louise Slongo and Christopher Ronald Slongo, who had been in a long-term, traditional marriage with more than 23 years of cohabitation. The pair had children together, and Pamela Slongo had stayed home to care for them and the home for the majority of the marriage. After separation, the wife had found some part-time employment but was not able to generate any significant level of income. During the marriage, the husband had earned employment income in the range of $130,000 to $140,000. Both child and spousal support were involved in the appeal, but I will only discuss the spousal support issue.

At the time of review, the spousal support payable to the wife was approximately $2,600 per month, plus the child support. However, the original motions judge and the Court of Appeal terminated the child support. The husband’s employer offered to allow him to retire early and be paid out the commuted value of his pension entitlement, which was worth nearly $2 million. Some was to be paid out as income over a period of time (annual lump sums over six years) and some was paid out into a Locked-in Retirement Account, also over time. The pension had been valued upon separation and equalized based on the valuation. The commuted value of the pension on early retirement was significantly higher than what was equalized. Both parties tendered expert evidence on, among other matters, the value of the unequalized portion of the pension.

The initial motions judge found that there had been a material change in circumstances warranting a review of support. He further found that the unequalized amount of the pension amounted to an annual income over five years of approximately $57,000. The motions judge also declined to apply the SSAGs to the analysis of quantum of support, ordering an amount payable lower than the low end of the SSAG, although indicating he was using the SSAGs as a “check” on his numbers. In declining to apply the SSAG, the motions judge held that there was an element of what he termed “luck” with respect to the husband’s very high pension payout, rather than a result of the wife’s efforts and assistance during the marriage. In addition, the motion judge held that the wife had mismanaged her finances post-separation and that her expenses were unreasonable, impacting her desire for higher support. Ultimately, the motion judge ordered spousal support to increase to only $5,000 per month.

The Court of Appeal for Ontario allowed the appeal based on several errors. First, the three judges ruled the judge in the Superior Court of Justice erred by declining to apply the SSAG ranges and relying on the “luck” approach and finding that the wife’s use of her equalization payment to buy a home for her and the children, rather than generating income unreasonably, increased her expenses.

The court also found that the motion judge erred by backing out the amount of the pension accrued prior to marriage. Additionally, the court found that the motion judge erred by allowing only one half of the unequalized portion of the pension income stream to be used for purposes of determining available income for support, on the basis that the wife would have only been entitled to half the pension at the time of separation. The court confirmed this was an erroneous application of equalization principles to the issue of income available of support. A number of other errors were also identified.

In increasing the spousal support, the court determined that the wife had a strong compensatory claim. This was because the husband’s post-separation income increase was a direct result of the employment he had throughout the marriage, namely, the pension having continued to accrue with the same employer, and the consequent payouts were a result of the income level the husband had been able to generate as a result of the wife’s historical contributions throughout the marriage.

This, the court said, was not luck. The court also clarified that while the wife had an obligation to use her equalization payment to generate income, based on some of the principles in Boston v. Boston, she had to do so around the same time as the payor husband’s normal retirement. Here, she had years before she would be obligated to sell the house she bought to generate retirement income from that capital asset.

The ultimate result in this case was that the Court of Appeal set the amount of retroactive and ongoing spousal support for the wife on the basis of the SSAG ranges (using the same range as found in the Separation Agreement), using the husband’s actual available income in each tax year based on the lump sum payouts he received. The court backed out approximately 31 per cent of the pension payout income each year, being the percentage share of pension that had already been equalized. For 2012, this resulted in spousal support of $20,000 per month, and in 2013, $8,500 per month. The parties were required to adjust support in years following using the same approach.

In my view, this is an important decision from the Court of Appeal, confirming that post-separation income increases do need to tie into the recipient’s contribution during the relationship toward that income stream, that the SSAGs will generally be applied in support reviews and that, notwithstanding the fact that the SSAGs may be inappropriate in cases where the payor’s income is above $350,000 annually, on a compensatory claim, unless there is a strong reason not to, the ranges will still be applied. There is a lot of good information and analysis in this case on these issues as well as expert evidence in valuing unequalized pension income streams. I encourage anyone practising family law to read it.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2018 Nelligan O’Brien Payne LLP.