Spousal Support – Lump Sum or Periodic Payments? Inspired by Vanos v. Vanos, 2010 CarswellOnt 9680

Practicing as a divorce and family lawyer in Toronto, I have stumbled upon a piece of wisdom that permeates family law cases. We, human beings, are generally averse to paying for things. We are even more averse to paying for long periods or indefinitely. On the other hand, not many of us like to be in a situation of need, where we must rely on another person, especially a former spouse for our living expenses. It is not surprise then that the Courts have to be particularly careful in determining who is entitled to spousal support, for how long and in what form (i.e. periodic payments or lump sum).

The first step in the application for spousal support is convincing the court that you qualify to receive support because you either need it or because your role during your marriage has put you at a financial disadvantage that needs to be redressed.

To even apply for spousal support, you have to make sure that you qualify under the definition of “spouse.” At present, spouses are defined for purposes of support obligations as either:

1. married couples; or
2. any two people, who although not married to one another, have been living with each other in a marriage-like relationship continuously, and for a period of not fewer than three years (or in a relationship of some permanence, if they are the natural or adoptive parents of a child).

Assuming that you can establish that you are a spouse, the next critical issue is whether you are entitled to support. In determining entitlement, courts will need to make sure that your situation reflects the legislative objectives of spousal support provision. Namely,
1. A recognition of the spouse’s contribution to the relationship and the economic consequences of the relationship for the spouse;
2. Equitable sharing of the economic burden of child support;
3. The making of fair provisions to assist the spouse or same-sex partner in becoming economically self-sufficient; and
4. Commitment to relieving financial hardship, if this has not been done by orders related to property and the matrimonial home.

Considering that divorce in Canada is no fault, it should come as no surprise that in making an order as to spousal support, a court is not entitled to take into consideration any misconduct (such as adultery for example) of a spouse in relation to the relationship, unless there is a course of conduct that is unconscionable, which is a very high treshold.

In making an order for spousal support, s. 15(2)(4) of the Divorce Act (or an equivalent in the Family Law Act) entitles a court to take into consideration the condition, means, needs and other circumstances of each spouse or same-sex partner and of any child of the marriage for whom support is sought, by reference to factors including:

(a) the length of time the spouses cohabited;
(b) the functions performed by each spouse during cohabitation; and
(c) any order, agreement or arrangement relating to support of either spouse.

Amount of Spousal Support

If you have managed to establish that you are a spouse and that you are entitled to spousal support, a court will need to determine how much you should get. This is called the quantum of spousal support. This issue is probably the most contentious, and the list of factors that will determine how low or how high support payments should go is long and non-exhaustive. After considering each party’s income and budgets, a judge will need to decide how much will be needed for the recipient party to maintain the standard of living to which he or she was accustomed while the relationship was intact. Note however, that because child support is payable as priority to spousal support, however, the payor spouse may not be in a financial position to pay spousal support as well as child support.

Method of Payment and Duration

The final issues, and the ones I wish to comment on a little bit more today is the method of payment and the duration of spousal support. Spousal support is, generally, presumed to be payable on a monthly basis, but under come circumstances, a lump sum amount can be awarded. There are advantages to paying spousal support on a lump sum basis. For example, lump sum payment provides some degree of finality as the obligation of spousal support is satisfied. A spousal support release, signed upon the payment of a lump sum award, provides a clean break, but spousal support obligations may not be immutable, depending upon the circumstances, and subject to ever-changing caselaw. Another advantage of a lump sum payment is that, as opposed to a monthly payment, it is not taxable in the hands of the recipient spouse (nor is it deductible to the payor spouse). Lastly, by receiving a lump sum, the recipient spouse reduces the risk of defaults in payment obligations. Monthly payments, in contrast, are generally more financially affordable to the payors.

The amount and duration of both, periodic and lump sum spousal support awards is subject to variations if material change in circumstances comes to light.

The parties in this hotly contested separation married in 1992 and had two children before separating in 2005. The trial judge ruled on the issues of spousal support, child support and property division, among others. My commentary will only focus on what I perceive to be the most controversial aspect of this case – namely, the order of lump sum spousal support.

It is settled that a trial judge has wide, if not unfettered, discretion when ordering the method of spousal support payments as per s.15.2 (1) of the Divorce Act, which says: “A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.” The key question on appeal was whether the trial judge’s award of lump sum spousal support was justified under the circumstances. Here are some key facts, as they related to the award of lump sum spousal support:

The husband is a piece of work. He lied to his wife, cheated and tried to hide his finances – not a very sympathetic fellow by any standard. He also filed to honour “fully” two previous court orders for support and despite being financially able to pay, he unilaterally reduced the quantum of spousal support payments to levels that he considered appropriate, forcing the wife to ask for the help of the Family Responsibility Office. The trial judge read these facts as indicators that the husband put his own financial interest ahead of those of his wife and the children. In addition, the husband did not provide full disclosure of income and assets in a timely manner. The trial judge further suggested that the husband would in future resent paying spousal support due to his estrangement from children. Lastly, the Court considered that the husband’s job loss created added uncertainty about his future compliance with periodic spousal support award.
In ordering a award lump sum spousal support, the trial judge considered legal principles governing such awards, and asked for submissions from parties on the issue of lump sum spousal support award once husband’s employment status was revealed.

The Court of Appeal did not find any fault wither either the judge’s reasoning or procedure that he followed, and consequently upheld the lump sum award. On appeal, the husband claimed that the trial judge’s award of lump sum spousal support “was not made to address the economic disadvantages arising from the marriage but, rather, as an impermissible means of redistributing the parties’ family assets under the guise of support.” Court of Appeal rejected this argument on the facts of the case.

As both levels of court freely recognize, this was a highly contested trial between two emotionally volatile litigants. I find no fault with the Court of Appeal decision in upholding the award of lump sum spousal support. The lower court’s analysis of spousal support entitlement and the quantum are thorough and spot on. I would, however, like to discuss the issue of how much weight trial judges should place on litigants’ past failures to honor “fully” their spousal support obligations, before ordering onerous lump sum spousal support. The husband’s present, past and future resentment towards the payment of spousal support, and his occasional obstinance, standing alone, should not be significant factors militating in favour of lump sum award. Allow me to explain. Any uncertainty in the future payments of periodic spousal support would have been appropriately addressed through FRO’s continued intervention. Lump sum was not necessary to address this concern. I don’t know many people that enjoy paying spousal support. More than any other order in family law, spousal support orders tend to bring the worst in people, as they are almost always viewed as unfair and disproportionate by the payor. Maybe the terminology plays a part in this as well. After all, who would feel comfortable “supporting” their spouse, turned “enemy”, which is unfortunately how most family law litigants see each other.

Ontario courts ought to be more cognizant of these psychological dynamics, and see a payors’ spotty compliance and occasional withholding of spousal support in the context of a heated trial for what they are – instances of psychological venting, or “acting out.” In a vast number of case, these actions are not logical and premeditated choices designed to undermine the other party’s financial health. They are acts born out of frustration and hurt. None of this is intended as the criticism of Ontario courts in penalizing chronic “dead beat” parents and spouses, who have a well-established pattern of refusal to pay support. Courts are right to, and should continue to penalize malicious and irresponsible payors, but they should also be very careful in painting all payors with the history of resistance to support payments with the same brush. In the end, what killed the husband’s case in my opinion was his initial failure to provide full and frank disclosure of his income and assets. Absent this, his past lack of compliance and his temporary loss of work, should not have been enough to warrant a lump sum award.

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Savvy Couple’s Guide to Marriage Contracts in Ontario

Life is filled with surprises, but your financial future should not be one of them.

Marriage contracts exist to limit your financial exposure in the event that your marriage does not work out. Full financial disclosure is crucial in negotiating a marriage contract, as this requirement of financial transparency is designed to bring forward any issues that could lead to potentially dangerous surprises down the matrimonial road.
Marriage contracts are among the most sensitive and emotionally charged legal documents. Negotiating a cohabitation agreement or a marriage contract runs contrary to most people’s ideal of romantic relationship because such an agreement requires contemplating dissolution. Nevertheless, entering into a domestic contract is better seen as a sign of mutual respect as it is rooted in the belief that your relationship is strong enough to handle serious discussions about each party’s needs. One thing that I have learned as a family lawyer in Toronto is that rather than a repudiation of a relationship, domestic contracts are a prudent and practical move that establishes and protects everyone’s property rights. Entering into a domestic contract can save you strife and expense of litigation down the road, or at the very least provide a peace of mind.
In recent years, marriage contracts, otherwise known as prenuptial agreements  (prenups or post-nups) have been gaining favour with Canadians. These domestic agreements are designed to protect each person in case of abreakdown of a relationship and divorce and alter the general property rights and various other legal entitlements of married couples.
Here is a summary of what marriage contracts can and cannot do for you:
·       1. Marriage contract usually change the equalization of net family property, by defining ownership of certain pieces of property between your spouse and yourself.
·       Not only will a marriage contract safeguard all of your pre-marriage assets in the even of divorce, but it will also shield you from having to share any increase in the value of property that you owned at the date of marriage. When drafting a marriage contract, you can also determine who will have ownership of any secondary or assets that you purchase    together over the course of your marriage.
·       By entering into a marriage contract, you will likely be safe from pre-marriage debt, financial issues, business ownership, or loans that your spouse may have incurred, and you will be able to address in a mutually satisfactory fashion the division of any joint debts and liabilities.
·       Marriage contracts can provide peace of mind by helping you and your spouse avoid disputes over asset distribution and they can spell out what gifts or inheritances will be shared or held exclusively by one spouse or the other.
·       Under some circumstances, a marriage contract can either do away with spousal support obligations or modify them in a manner that reflects both parties’ values and concerns.
·       A marriage contract can be a useful indicator of intent concerning each parent’s right to direct the education and moral training of their children.
Despite its initial appearance as a magic wand for the divorcing couples, a marriage contract has limitations. Some of the most important ones are the possession of the matrimonial home and the custody of the children.
1) Part II of the Family Law Act provides that each spouse has an equal right of possession of any matrimonial home and that neither party can sell or mortgage a matrimonial home without the written consent of the other spouse. Any provisions in a marriage contract purporting to limit these rights are unenforceable.
2) Marriage contracts cannot prospectively determine the custody of the children or the children of the marriage, as such decisions are subject to the best interests of the child test. In the determination of matters respecting the support, education, moral training, or custody of a child, a judge may disregard any provision of a marriage contract.
No marriage contract lawyer can work miracles. Marriage contracts are expected to be fair and reasonable legal agreements that are designed to protect both parties over the long term. Please note that drafting a patently one-sided agreement may run the risk of undermining the enforceability of the marriage contract in the future under various common law and equitable doctrines. As always, to ensure that your rights are protected, contact a knowledgeable Toronto family lawyer.
Ivan Steele, B.A., M.A.,J.D.
Barrister and Solicitor
Ivan Steele Law Office, 33 Wood Street, Suite 1709, Toronto, Ontario M4Y 2P8, Canada
Phone (647) 342-0568
Fax (647) 344-4493

Surrogacy is the Way to Go

Surrogacy, the Clever Way

Despite what you might have heard from coworkers, aunts and taxi drivers, surrogacy is NOT illegal in Canada. In contrast to some of the more progressive jurisdictions, in Ontario you cannot pay someone to conceive and/or carry a child for you, but you can reimburse that person for her out of pocket expenses. As long as you keep the right attitude and proceed in a clever way, surrogacy can be fun for the whole family!
Although immensely rewarding in the end, planning a family through assisted human reproduction can be an undertaking of epic proportions that will test your resolve and challenge you emotionally and financially. In order to avoid additional frustrations by the hands of our well meaning but overwhelmingly caring government officials, get to know the basics of the surrogacy law, and when in doubt, check with a lawyer.
The Assisted Human Reproduction Act, proclaimed, in part, in April 2004, is a young piece of legislation that has not yet been adequately tested in courts. Nevertheless, just because we have not yet seen prosecutions or many challenges to this law, it does not mean that it does not have teeth. If you plan carefully and abide by the rules set out in the Act, you surrogacy should not land you in hot water. Although Canadians are free to give and to receive eggs and sperm and to reimburse a surrogate for some of the expenses associated with the process, please leave your checkbook at home. You should also not try to use gifts and payments of the expenses of the kind person who is carrying your child as a way to mask what are in reality payments for the surrogacy services. We are still waiting for further clarifications on what, in the government’s opinion, falls into the category of acceptable expenses.
Sperm and egg donations are not illegal in Canada, but do not reach out for cups and turkey basters quite yet. The exchange of reproductive genetic materials is strictly regulated, and before you go window-shopping through the genetic bazaar, consult with a legal professional, as you may face draconian penalties if you run afoul of the rules. The law does not prevent someone from donating his or her genetic material for altruistic purposes. Reimbursement of expenses incurred in the course of the donation is also permitted, but section 7 of the Act prohibits the selling or buying of gametes from a sperm donor or an ovum donor or an embryo donor. So, next year, when your best friend asks you what you would like for Christmas, you will be ready to tell him or her, and hope that they are really in the spirit of giving.
You have looked everywhere and you have finally found a perfect surrogate. Now you have a choice to make. There are two difference kinds of surrogacy arrangements – gestational surrogacy or traditional surrogacy?
A gestational surrogate carries a child to whom she is genetically unrelated. In some situations, only one of the intended parents may be genetically related to the child. Picture it: You have used your own egg and you know that the child will have half of your chromosomes. The other half will come from a sperm donor, who you may or may not know. Through the magic of family law in Ontario, you and your partner, rather than the surrogate and the sperm donor will be recognized as the child’s parents, and both of your names will appear on the birth certificate. This is called declaration of parentage.
A traditional surrogate is the child’s genetic mother and birth mother, and enters into pregnancy with the intention of relinquishing custody once the baby is born. In any surrogacy arrangement, you need to enter into a contract and go through the declaration of parentage process once the child is born. Although not extensively tested for enforceability in Canadian jurisdictions, contracts setting out everyone’s legal rights and obligations are an essential step. At the very least, surrogacy contract is proof of intent, and as such, the agreement needs to be executed by all parties before an embryo is transferred to the surrogate. Furthermore, make sure that the egg donor receives independent legal advice, even if she says that “it is OK” and that she knows what she is doing. Without independent legal advice, your agreement may be vulnerable in the future on the basis that a surrogate gave up her rights without knowing what she was giving up.
I know that this sounds complicated, there is no need to fear. Really. As long as you are stable, capable and loving prospective parents, an Ontario court should have no problem granting your request and making you the only parents that the child will ever know. If you use a surrogate in Ontario, you will most likely not need to adopt the child. Ontario jurisprudence presumes that the woman that gives birth to the child is the mother. The Family Law Rules and Child and Family Services Act outline a process by which, with help of DNA evidence and sworn affidavits from all parties, an Ontario solicitor can ask a court that the intended parents be declared as the baby’s real parents. Once again, surrogate needs to have independent legal advice in order to fully understand what she is signing or swearing to. This requirement drives up the cost of the process, but is absolutely vital, considering that a single lawyer is conflicted out of representing both sides with opposing interests in the matter.
In December 2010, the Supreme Court of Canada upheld Quebec’s challenge to this legislation by giving to the provinces the power to regulate fertility clinics. While the immediate effects of this decision remain unclear, its impact on the issue of commercial surrogacy is limited, as this ruling does not seem to interfere with Ottawa’s jurisdiction to ban the paying of fees for egg or sperm donation or surrogacy services.
Ivan Steele, B.A., M.A., LL.B.
Ivan Steele Law Office

Toronto Loves Separation Agreements

Who do you think is in a better position to decide what is better for you as a separating couple, and for your children – the two of you or a robed stranger, seeing bits and pieces of your lives. Take it form a family and divorce lawyer –  In most cases that do not involve abuse and high conflict, the answer is clear – your lives, your separation, your terms. As an added benefit, separation agreements may reduce the tension and prevent further deterioration of a relationship by importing financial certainty into your respective lives, without having to involve the Court.

Separation agreements are domestic contracts and, therefore, legally binding document, which can be filed with the Court and enforced. Two persons who are married or who have cohabited and are now living separate and apart may enter into a separation agreement, which can address almost all matters in the settlement of their affairs. A separation agreement is your chance to be the creators of your own destiny, since you are allowed to spell out your respective rights and obligations regarding ownership in or division of property, spousal and child support obligations, and custody of and access to children.
While separation agreements provide a great deal of flexibility in arranging financial and familial affairs and are usually a much less costly alternative to protracted court applications, these contracts are always subject to best interests of a child test. Specifically, the Court retains the final authority to decide the matters concerning the education, moral training or custody of a child. Separation agreements do not allow parents to get out of their child support obligations with impunity. An agreement must substantially comply with Child Support Guideline and the Court is free to set aside any provision that is unreasonable having regard to the Guidelines.
Separation agreements have a significant and long-lasting impact on many areas of your life, long after signing. They may have significant tax consequences and can also influence your estate planning, immigration and financial future for years to come. It is not only a good idea, but indeed essential to have a separation agreement prepared and reviewed by lawyers.
If not prepared properly, a separation agreement may not have a desired effect. When entering into a separation agreement, as with any other domestic contract, it is crucial that both parties receive separate and independent legal advice. If, following repeated insistence, and after having been given sufficient opportunity to seek independent legal advice, one of the parties still refuses to do so, but wishes to execute the agreement, all efforts should be made to address this refusal in the contract itself.
For a separation agreement to be a useful alternative to a court process, both parties need to be committed to its provisions. If you have a solid Separation agreement, your divorce pleadings will also be simpler, as you will make it easier for the court to grant you an uncontested divorce.
Three parting tips to remember when working with your lawyer on negotiating a separation agreement: be reasonable, don’t be accusatory or defensive and always be honest with your lawyer. While separation is a trying time, you will not help yourself by using the negotiating table as an area of choice to play out relationship frustrations, resentments and recriminations.
If you and your spouse believe that you will be able to muster enough goodwill to agree to terms of a separation agreement, you should strike while iron is hot. Waiting to settle your family matters in order to save a couple of thousand dollars now will put you at risk of losing far more in the long run. The chances are that, as time passes, either yours or your spouse’s priorities will shift, and one of you will likely change his or her mind about a material point of agreement.
Variation of a Separation agreement.\
It is possible to apply to the court to vary a term or terms separation agreement, a Court will only change the terms of a separation agreement when there is a compelling reason to do so.  For example, if the agreement is unfair and one sided. Although it provides significant safeguards, a separation agreement is rarely an airtight guarantee of the outcome of your separation. The courts, nevertheless, show great deference to separating spouse’s contracting autonomy. Applications for variation of a separation agreement in Ontario are considered in light of numerous factors, such as how the agreement came into existence, the conduct of both parties at the time of negotiation, full and frank financial disclosure and other common law and statutory considerations found in the Family Law Act.
Ivan J. Steele, M.A., J.D.
Barrister and Solicitor
Ivan Steele Law Office