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.