Divorced couple with child

Burlington Family Law Consultations

Background
To understand the issues and problems which confront family lawyers and their clients today, it helps to have an idea of our recent history. What follows is not a research paper on the history of family law. Many law reform commissions and academics have already done so in a far more comprehensive manner than I could ever hope to do. Instead, I will offer some personal recollections and observations from the Clark Craig Law Office to give the reader some perspective on the current state of the law and where we might be going.

When I started practice in the early 1970s, Ontario family law was governed by a quaint piece of legislation known as The Deserted Wives and Children’s Maintenance Act. Under this statute, only wives who could prove that they had been deserted by their husbands could apply to the court for support (no husbands, common law or same sex partners. Please! This was Ontario). The requirement of proving desertion led to epic struggles in the family courts as to whether a wife had been “constructively deserted,” i.e. left with no choice but to leave home for the sake of her own safety or health or whether she had done so voluntarily. In the former case, she would receive support; in the second, no support regardless of need or the husband’s ability to pay. Even for a wife who managed to obtain a support order, a single act of adultery following the separation of the spouses was sufficient to disqualify her from support forever. Private detectives were routinely employed to track deserted spouses, peeking in windows and conducting all night vigils in the hopes of obtaining evidence of a tryst with another man, thereby ending forever the support claim under provincial law.

Divorce law was a little bit more progressive, thanks to a new Divorce Act which was passed in 1968. Instead of having adultery as the only ground of divorce, either spouse was able to sever the ties of matrimony after three years of separation (five if the party who had deserted was the petitioner). Only if one of the parties could prove adultery or cruelty could a divorce be obtained at an earlier date.

All divorce hearings, whether contested or not, required a hearing in open court. Many counties developed a practice of instituting a “divorce day” each month when all of the couples seeking an uncontested divorce would appear in court with their black robed lawyers for a mass confession. One by one, these couples would take the witness stand in the overflowing courtroom to tell a totally disinterested judge the lurid details of his or her marriage and why it was now in order to sever the bond of holy matrimony. The legal necessity for corroboration required that a “witness” verify the adultery or cruelty as alleged.

Support awards for spouses and children were negotiated or court ordered on an individual basis with little or no consistency. Amounts varied widely from region to region and even from family to family based upon the individual settlement or court order. Neighbouring families in exactly the same circumstances might have drastically different arrangements.

Property law was massive confusion, with no significant legislation to guide the judiciary or lawyers. Some will recall the unfortunate Mrs. Murdoch who fought all the way to the Supreme Court of Canada only to learn that her lifetime of work on the family farm was no more than would be expected of a loyal farm wife and that she had done nothing to entitle her to a share in her spouse’s property.

Realizing that it was time to think about some sort of reform, the provincial and federal legislators reluctantly and hesitantly tiptoed into the 20th century. Ontario revoked the Deserted Wives and Children’s Maintenance Act and replaced it with the Family Law Reform Act in 1978. No longer was there a need to prove desertion in order to obtain spousal support. Proof of need and ability to pay was sufficient to establish entitlement.

To remedy the situation of those in similar straits as Mrs. Murdoch, Ontario introduced a limited form of property sharing. A portion of a couple’s assets known as “family assets” became subject to division in the case of separation. Non family assets such as business assets, RRSPs, single name bank accounts, etc., remained immune from division. The new law applied only to married couples and not to those in common law or same sex relationships.

Whatever lawyers may have thought of the “improved” law for the division of property, at least it provided a measure of certainty for a short while. In what was to become a trademark of family law extending to the present day, however, the judiciary decided that they would attempt to introduce a measure of “fairness” to the family law process. Judge made law extended the family asset doctrine far beyond the literal meaning of the legislation. By the 1980s, lawyers were routinely settling property issues by transferring up to 25% of non-family assets, knowing that a court would find a way to do so.

This conflict between the lawyer’s desire for certainty in order to properly advise clients and predict results accurately and the desire of judges to achieve their personal view of an equitable result even if it involved stretching the existing law almost to the breaking point continues to the present day.

With this short background, we can now examine where we are today and where we might be headed.

Spousal Support
The legal basis of spousal support is found in the Divorce Act and in the family law legislation of the various provinces. The Divorce Act applies to the whole country in areas of federal jurisdiction including custody, child support and spousal support. Jurisdiction in these areas is shared with the provinces which have their own, usually similar, legislation for cases which are not linked with a divorce. Provinces maintain exclusive jurisdiction over property issues.

A spouse is defined in Section2 (1) of the Divorce Act as: “either of two persons who are married to each other”

In Ontario, the Family Law Act extends the definition of spouse for support purposes to include persons who have cohabited for three years or who have lived together in a relationship of some permanence if they are the natural or adoptive parents of a child.

Under the Divorce Act, the court is instructed to take into consideration a number of factors in a spousal support award. Section 15.2 (6) of the Act directs that a court making a spousal support should:
  1. recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown
  2. 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;
  3. relieve any economic hardship of the spouses arising from the breakdown of the marriage;
  4. in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable amount of time.

Over the years, courts have emphasized different parts of the criteria in their attempts to develop an underlying theory or basis for spousal support. For a few years, many courts and academics supported a regime whereby a spouse seeking support had to demonstrate a “causal connection” between the need for support and the marriage. Spouses who left a marriage in the same economic position or with the same employment risked being denied support under the causal connection test. Similarly, those who suffered a debilitating illness could be denied long term support, the argument being that there was no connection with the marriage.

The landmark case of Moge v. Moge decided in the Supreme Court of Canada in 1992 finally provided a measure of guidance for determining entitlement to spousal support, in theory, at least. Madame Justice L’Heureux Dube, writing for the majority in a lengthy decision emphasized that the purpose of spousal support is to relieve economic hardship that arises from the marriage or its breakdown and that the focus of the enquiry when assessing spousal support must be upon the effect of the marriage in either impairing or improving each party’s economic prospects.

After Moge, the Supreme Court faced a difficult decision in the case of Bracklow v. Bracklow where the court was asked to decide whether a spouse who married at a time when she was ill and who became seriously disabled after a relatively short marriage could maintain a claim for ongoing support. The Supreme Court of Canada found nothing in theory wrong with such a claim and sent the case back to the lower courts for determination.

While Moge and Bracklow did provide a limited amount of guidance, the general statements of the Supreme Court have proved difficult to apply in individual cases. Lawyers arguing support cases routinely cite Moge in support of both sides of the same case as it contains something for everyone somewhere in its pages. The determination of the amount and duration of support to be awarded in individual cases remained uncertain and unpredictable.

In an attempt to provide some measure of guidance to judges, lawyer, and the public the federal Department of Justice commissioned two experienced academics, Prof. Carol Rogerson from U of T and Prof Rollie Thompson of Dalhousie to undertake what proved to be a massive undertaking. In 2008, after many years of work, the spousal support advisory guidelines (SSAG) were introduced to provide a range of suggested support based upon various sets of circumstances. It is very important to keep in mind that the guidelines deal only with quantum. Entitlement to spousal support remains to be established under the existing criteria.

Unlike the child support guidelines discussed below, the SSAG do not have the force of law. Nevertheless, they have slowly but surely become an integral part of the system. Rare is the matrimonial dispute where the guidelines are not consulted. Nearly all cases are either settled or decided somewhere in the range between the high, middle and low ranges suggested.

Calculation of the range of spousal support for simple cases where the income is derived only from employment can be done at http://www.mysupportcalculator.ca/Calculator.aspx.

Child Support
Unlike spousal support, the area of support for children is governed by statutory guidelines which, in theory at least, provide a measure of certainty. Under the federal child support guidelines the amount of child support is determined by tables based solely upon the income of the payer spouse and the number of children. The Federal Child Support Guidelines were updated as of December 31, 2011. They are available at www.justice.gc.ca/eng/fl-df/child-enfant/look-rech.asp.

So far, so good. Unfortunately, instead of keeping the law simple and predictable, the legislation goes on to provide more exceptions than rules. The following examples provide only some of the additional considerations which may govern an individual case:
  • Does the supporting spouse spend more than 40% of his or her time with the child? If so, a court may decide to take this into account in a child support award. (I won’t even try to describe the various formulas which calculate who gets credit for the sleep and school time). Child access negotiations can sometimes be governed by a calculator rather than by the child’s interests.
  • Is one spouse paying day care? If so this constitutes an “add on” whereby the supporting spouse must pay in addition to the table amount, a proportionate share of this expense. (Don’t forget that day care is deductible and that the benefit of the deduction must be taken into account in determining the ratios – don’t even attempt this calculation without a computer and dedicated software)
  • Does the child have “extraordinary expenses”? Courts throughout the land have struggled mightily with this one. One court even went so far as to suggest that activities such as rep hockey might be extraordinary while house league would not.
  • What about post-secondary school expenses? In general, spouses are expected to share this cost in proportion to their respective incomes after taking into account any contribution from the child. While the law is slowly evolving there is still little consistency from court to court or case to case.
  • What is “income” anyway? Unless the payor spouse is salaried with no overtime, obtaining an accurate figure is difficult. The income of many spouses, particularly those who are self employed or on commission, is highly variable from year to year. Other spouses obtain a great deal of income from unreported cash transactions. Although the guidelines provide for regular updating and exchange of information based upon current income, this rarely occurs in real life.
  • Would the payment of the table amount cause “undue hardship” in an individual case. Are there children of other families also entitled to support? Are there unusually large costs of access due to long distances. Only an experienced lawyer using dedicated software has any chance of dealing with these ones.
  • Hopefully the next few years will slowly and case by case resolve many of the remaining issues in child support and lead to some measure of predictability.

Property Law
Responding to complaints that matrimonial property legislation with its emphasis on division only of “family assets” did not go far enough; the legislature in Ontario adopted a new Family Law Act in 1985. This Act introduced the concepts of “net family property.” and “equalization,” a type of deferred community of property. During the marriage each spouse owns all of his or her own property and is free to deal with it free of any claims by the other. The one exception is a matrimonial home which can only be encumbered or sold with the consent of a non-titled spouse. Unlike the spousal and child support sections, the property legislation deals only with married spouses.

When a triggering event, usually separation or death, occurs each spouse or the estate of the deceased in the case of death calculates his or her respective “net family property.” To do so, each spouse values all assets as of the “valuation date” which is arbitrarily set as the date of separation or death. Some assets added during the marriage, such as gifts from third parties, inheritances, and personal injury insurance settlements may not be included in the calculation depending upon the exact circumstances. Each spouse then subtracts all indebtedness at the valuation date and the value of all assets owned as of the date of the marriage. (Keep those old bank books, investment certificates and receipts – you may need them some day). Each spouse having calculated his or her net family property, the difference is then “equalized” so that each spouse receives one half of the increase in value of the assets over the term of the marriage.

Complicating what is already a difficult exercise is the means by which the legislature and the courts have chosen to deal with a number of the most common of assets. Without attempting in any way to deal with all of the assets subject to division, I will set out below some of the most difficult problems:

Matrimonial Home
The matrimonial home is defined in Section 18 (1) of the Family Law Act as
“Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence….”

Under the law which has developed in the courts it is possible to have several matrimonial homes but only if they qualify under the definition. That family cottage may be a second matrimonial home but only if it was “ordinarily occupied” during the marriage.

In a unique provision restricted only to the matrimonial home, the legislation provides that a spouse receives no credit or deduction for bringing this asset into the marriage. The result is that a person who enters the marriage as a homeowner will not be able to deduct its value upon separation, whereas the spouse who brings in cash and buys the home the day after the marriage will receive a full credit. Adding further confusion, the legislation goes on to provide that if the original home is sold and a new one is purchased, the credit for the original home brought into the marriage is revived. Lesson: if you brought a home into the marriage and the marriage is rocky – sell the home quickly and buy another one!

Pension Division
Until recently the question of how to divide a pension was by far the greatest headache in all of family law. A quarter century of begging by judges, lawyers and the general public finally led to legislation and regulations for the division of pensions administered under Ontario law.

There are two basic types of pension plans, the defined contribution plan and the defined benefit plan.

A “defined contribution” plan is one under which the employer and employee each contribute a fixed amount annually into the plan. The funds are then invested by the trustee of the plan. Upon retirement, the amount standing to the credit of the employee in the plan is calculated and may then be invested in an RRSP, annuity or other permitted type of investment. Valuation of a defined contribution plan is simple. Since the value at the date of the marriage and separation are both known, the increase in the value can be obtained simply by subtraction. ( Subject to various tax considerations which are beyond the scope of this discussion). More and more plans, particularly in the private sector are using this type of plan.

The other type of pension is the “defined benefit plan”. Under this types of pension plan, the employer and usually the employee as well each contribute an agreed amount to the plan. The benefits, however, do not relate to the contributions but to a predetermined formula. A typical plan might provide for a payment of 1 ½ % per year of membership multiplied by the average of the best five years of employment.

The calculation of the value of a defined benefit plan is extremely complex. Fortunately, the Ontario government has finally passed legislation under which employees can now submit the request for a pension valuation to their employer. Once valued, the pension can then be divided between the respective spouses according to their interests.

Gifts and Inheritances
In many cases inheritances and gifts from third parties acquired during the marriage can be completely exempt from inclusion in net family property. This exclusion extends to assets purchased with the exempt property as long as it is possible to “trace” the flow of funds. Mixing of the gift or inheritance with other assets will cause a loss of the exemption, thereby requiring inclusion in net family property. Once again, the matrimonial home is excluded from the general rule. Lesson: If you inherit money and the marriage is shaky, make sure you don’t mix up the inheritance with other assets or use it to pay debts or buy a family home.

Common Law Spouses
As noted above, the property parts of the Ontario Family Law Act apply only to married spouses. Common law spouses, no matter how long the relationship, have no status under the legislation to seek equalization of property upon relationship breakdown. For several decades the courts have struggled to define the legal principles which would allow non-titled common law spouses to seek compensation. The law has now evolved to the point where a claim for an interest in property can now be asserted based upon a “joint family venture” using the legal concept of unjust enrichment. The Supreme Court set out the guidelines for this type of claim in the now well-known case of Kerr v. Baranow, cited as Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269.

Divorce
Under the Divorce Act, a divorce can be granted after a separation for a period of one year. Either spouse can bring an application for divorce immediately following separation and simply wait for the year to elapse before the divorce can actually be granted. If the divorce is uncontested, the process is straightforward and can be completed without the necessity of a court appearance, usually within a period of a few months. Due to the relatively short waiting period, few spouses these days use the other available grounds which include adultery and cruelty.

A divorce action is often combined with a number of other claims which may involve custody, access, support, and a wide range of property issues. In these cases, it is usually possible to sever these other claims from the divorce and have the divorce itself proceed as soon as the year has elapsed, leaving the remaining issues for determination through the court process.

Marriage Contracts and Cohabitation Agreements
In order to avoid the uncertainties of the law, many couples choose to opt out of the legislation and adopt their own agreement on support and property division. Situations where a marriage contract may be advisable include the following:
  • Second marriages where one or both of the parties have children of the first marriage;
  • Marriages where one or both of the parties have an ownership interest in a private incorporated business or partnership and wish to protect the assets of the business;
  • Marriages where one of the spouses owns a home in which the parties intend to reside after the marriage.
  • Marriage or cohabitation where the parties wish to keep their finances separate and to leave a relationship with all of the assets which they own without any claims against the other.

Marriage contracts and cohabitation agreements are complex documents which often involve a significant amount of negotiation before they are completed. One of the prerequisites to a valid and enforceable contract is full and frank disclosure of all assets and liabilities as of the date of the contract. The process forces both spouses to take a hard look at how they intend to structure their relationship and their finances. All family lawyers have encountered instances of couples who conclude after such negotiations that they have not really faced the tough decisions that marriage requires and call off the ceremony.

It is not only the formal marriage that forces couples to define their relationships. The extended definition of spouse in many acts and the tendency of courts to find compensable contributions in many types of common law relationships cause many couples who are not married to enter into a “pre-nup” agreement before they choose to cohabit.

Because a marriage contract is generally negotiated at a happy stage of the relationship, many couples simply consult the lawyer for one of the parties and request that he or she draw the contract for them. No matter how simple the contract appears, a lawyer should never act for both parties in any type of marriage contract. Should there be a breakdown of the relationship in the future, one of the parties will inevitably attempt to void the contract on the basis of a lack of independent legal advice. To protect both of them, at the very least the lawyer will draft the contract for one of the parties and will then require that the other obtain independent legal advice from another lawyer.