divorce, separation agreement and spousal support lawyers in Victoria BC

In their recent Hall v. Hall, 2021 BCCA 115 decision, the BC Court of Appeal again considered how changes can be made to one’s spousal support despite prior agreement with an ex-partner.

Before reviewing the Hall v. Hall decision, it is important to understand what statutory provisions apply to this question – how separation agreements governing spousal support may be set aside or varied?

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Legislative Framework: Family Law Act & Divorce Act

The legislative framework governing separation agreements and their variation can be found in the federal Divorce Act, and BC’s Family Law Act.

Family Law Act

Section 164 of BC’s Family Law Act applies to written agreements, and it provides two ways in which a court may set aside or replace an agreement with an order.

The first way as set out in section 164(3) allows the court to consider how fair the process was when the parties made their agreement. The court may set aside the agreement, if it determines any of the following circumstances existed when the parties entered into the agreement:

  • (a) a spouse failed to disclose income, significant property or debts, or other information relevant to the negotiation of the agreement;
  • (b) a spouse took improper advantage of the other spouse’s vulnerability, including the other party’s ignorance, need or distress;
  • (c) a spouse did not understand the nature or consequences of the agreement;
  • (d) other circumstances that would under the common law cause all or part of a contract to be voidable.

The second way a court may set aside or replace an agreement is set out in section 164(5), and it allows the court to consider how substantively fair the actual agreement is. The court may set aside if the agreement, even it was concluded under a fair process, if the provision of spousal is considered “significantly unfair”. In determining significant unfairness, the court may consider the following factors:

  • (a) the length of time that has passed since the agreement was made;
  • (b) any changes, since the agreement was made, in the condition, means, needs or other circumstances of a spouse;
  • (c) the intention of the spouses, in making the agreement, to achieve certainty;
  • (d) the degree to which the spouses relied on the terms of the agreement;
  • (e) the degree to which the agreement meets the objectives set out in section 161 [objectives of spousal support].

Divorce Act

Similarly, pursuant to section 15.2 (1) of the Federal Divorce Act, a court may make an order requiring a spouse to pay reasonable support. To do so, the Court must consider:

  • (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.

Further, under section 15.2(6) the resultant support ordered should:

  • (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
  • (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
  • (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
  • (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

Additionally, under section 17(4.1) of the Divorce Act, a court may vary an agreement or order governing spousal support if there has been a “material change” in circumstances since the separation agreement was concluded, namely:

… a change in the condition, means, needs or other circumstances of either former spouse . . . since the making of the spousal support order or the last variation order made in respect of that order, and, in making the variation order, the court shall take that change into consideration.

spousal support and divorce or separation agreement lawyers in Victoria BC

Case Law: Hall v. Hall & other case precedent

In Hall v. Hall, the parties entered into a separation agreement in 2015, which included a provision for spousal support payments by Mr. Hall to Ms. Hall of a set amount, subject to “a material change in circumstances”. The agreement otherwise provided that it was final and binding, except for the calculation of child support.

In 2018, well after the parties’ had concluded their separation agreement, Mr. Hall was vested of certain stock options. Ms. Hall applied for an initial court order under section 15.2 of the Divorce Act for a retroactive increase in spousal support on the basis there was a material change in circumstances.

On hearing the wife’s application, the trial judge increased spousal support to an amount nearly quadruple the amount stipulated in the agreement, but declined to order retroactive application. Upon receiving this judgment, Ms. Hall appealed the denial of any retroactive increase in spousal support; and Mr. Hall cross appealed the trial judge’s decision to increase spousal support notwithstanding the wording of the parties’ separation agreement.

On appeal, the BC Court of Appeal allowed the husband’s cross appeal, and dismissed the wife’s. The BC Court of Appeal held that the trial judge erred in principle in his approach to interpreting the agreement by failing to consider the agreement as a whole, in the context of s. 15.2 of the Divorce Act, consistent with its mediated creation as a complete resolution of the issues between the parties.

In its reasoning the court elucidated the different analysis required under sections 15.2 and 17. The applicant for a review under section 15.2 is not required to prove a “material change” in circumstances as is required by section 17(4.1). Under section 15.2, the court engages in a two step analysis: first, the court must consider whether the separation agreement complied with the objectives of section 15.2 when the agreement was formed. If so, the court must go on to consider whether the separation agreement still complies with the objectives of section 15.2 in the circumstances existing at the time of the application.

However, in Hall v Hall, the court was required to consider if the vested stocks constituted a “material change” despite that the wife brought her application under section 15.2 and that the parties’ separation agreement was expressly intended to be “a full and final settlement of all issues between the parties”. This was because the same separation agreement stated that the $1900 monthly support agreed upon was “Subject to a material change in circumstances”.

In so doing, the BC Court of Appeal determined that the parties’ separation agreement, properly interpreted, did not support the conclusion that Mr. Hall’s vesting of stock options was a material change in circumstances; nor was any other basis for a change in spousal support established. In concluding this, the court referenced the language and organization of the agreement as follows:

[47] I conclude, however, that on a full review of the separation agreement, mindful of its creation to settle the interrelated issues in dispute in the mediation, the agreement does not support the judge’s conclusion that the receipt by Mr. Hall of stock options was a material change in circumstances triggering an increase in spousal support under para. 4 of the agreement. Starting from the narrow and moving to the broader, I observe that the judge did not consider whether the increase in income was enduring or had a measure of continuity as suggested is important in Powell (see para. 28 above).

[…]

[49] First, I consider the judge overlooked the plain effect of Recital H which, as a statement of fact, records an acknowledgement that receipt of these stock options was in the contemplation of the parties when they made their agreement:

[…]

[50] Second, the judge erred in principle in failing to consider para. 20 in its entirety, the structure of the agreement as a whole, or the language of the provisions for spousal support. Taking a narrow approach he found, erroneously, that the financial disclosure obligation and reference to stock options in para. 20(g) for “support” purposes was equally applicable to spousal support.

[51] For convenience, I repeat para. 20(g) of the agreement:

g. The parties will exchange complete copies of their respective personal income tax returns and notices of assessment by May 31st of each year for so long as support is payable. Brian shall deliver complete copies of any and all information from his employer with respect to stock options from his employer within 7 days of receiving such information. In addition, the parties will exchange any other financial information reasonably requested from time to time.

[52] Paragraph 20 is entitled “Child Support” but Ms. Hall correctly reminds us that by para. 33 of the agreement, the heading is of no legal significance. We are told that Justice Johnston concluded that para. 20(g), stripped of the “Child Support” heading, was broadly applicable to spousal support because para. 20(g) referred to “support” without a modifier. Faced with an order of another judge made for reasons that are not available, the judge held that the disclosure obligation in para. 20(g) applied to the application before him for spousal support. In my view this conclusion was incorrect and the interpretation was unreasonable. Several features of the agreement lead me to this conclusion.

• Absent the heading “Child Support”, para. 20(g) remains embedded in para. 20 in which each of the other subparagraphs refers either to child support or the Federal Child Support Guidelines (defined in Recital G as the “Guidelines”).

• Paragraph 5, which by its content can apply only to spousal support, also uses the unmodified word “support”, suggesting that the unmodified word “support” in para. 20(g) is, likewise, to be read in the context of the surrounding provisions, all of which deal with child support.

• The agreement is organized by setting out first all financial matters concerning only the parties, before recording in para. 20 their entire agreement respecting their child, suggesting that paras. 4 and 20(g) speak independently.

• The sole references in para. 20 to tables of support are to the Federal Child Support Guidelines and the “Guidelines”, but “Guidelines” are defined as the Federal Child Support Guidelines, that is, there is no reference in para. 20 to the SSAG.

• Recital G refers to both types of support through reference to the Federal Child Support Guidelines and the SSAG, that is, the parties referred to both bases of support where the agreement was to that effect.

• The parties had the assistance of legal advice and a mediator’s expertise, suggesting para. 20(g) is located where the parties intended it to be, amidst the provisions relating to child support.

• An annual disclosure requirement beyond child support obligations intrudes on the privacy and independence of both parties, contrary to the import of paras. 2 and 3 of the agreement.

[53] My conclusion is reinforced by a broader review of the agreement. I see no expectation in the agreement that this receipt of stock options increasing Mr. Hall’s income would lead to a change in spousal support.

In the result, the Trial Judge’s spousal support variation order was set aside, rendering the wife’s appeal moot. Implicit in the BC Court of Appeals decision is that it – unlike the Trial Judge – determined that the parties’ separation agreement complied with the objectives of section 15.2 both when it was formed, and at the time of the wife’s application.

Take Away

There are several take aways from the Hall v. Hall case. Firstly, you should ensure that your separation agreement contemplates your current and future objectives regarding spousal support obligations. Through both recitals and in the agreement’s substantive terms, your agreement should expressly state if it is intended to be a full and final settlement, including of spousal support; or, how and when it can be reviewed to account for any “material change”. Second, the decision underlines that you should have sufficient evidence to prove your position if you are either trying to setting aside or uphold an agreement. Third, it stresses the importance of settlement negotiations, and understanding when the potential risks of trial (e.g. legal costs, loss of control and anonymity) should probably be avoided.

To avoid unnecessary confusion, frustration and costs, it is recommended you speak with professional legal counsel without delay, to answer any questions you may have about your separation agreement or how to vary it.

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