Tag: spousal support

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Family Law High Conflict Divorces Support Claims

Daily Sanction Imposed on Husband for Failure to Disclose

In divorce matters, particularly in highly contentious situations, spouses may attempt to hide some of their assets in order to impact any support awards ordered by the court. While full financial disclosure is a cornerstone of determining a fair award, hidden assets are not uncommon. In one recent decision, the husband in a divorce proceeding had repeatedly failed to comply with court orders for disclosure, and so a unique tact was taken in order to compel his compliance.

Multiple Orders Ignored

In a proceeding that had dragged out for more than four years, the husband had failed to comply with four separate orders of the court to produce full financial disclosure to the wife. In response to the most recent order, the husband had proved more than 150 pages of documents to the wife, however it had turned out to be mostly comprised of duplicates of items that had already been submitted. There were several items the husband had been ordered to submit that remained unaccounted for.

In response, the wife brought an application to dismiss the husband’s pleadings in the matter due to his lack of disclosure. In the alternative, she sought a further order to produce, this time with a penalty attached for each day of non-compliance.

“Exceptional and Egregious” Circumstances

The court was unwilling to dismiss the husband’s pleadings, given that he had demonstrated at least a degree of willingness to cooperate with orders. However, the court did note that the husband’s actions had been “exceptional and egregious”, noting:

The wife states that another court order alone will not compel the husband to provide the documents. Five other orders have already been made, he has paid the associated costs and yet he has not complied with them. All of this shows that he believes he can disregard court orders.

The court found that the husband was not in violation of the orders as a result of a lack of understanding or ability. The husband was a savvy financial investor and he had willfully kept certain information from his wife in direct contravention of the court’s orders. Given his demonstrated unwillingness to comply, the court felt that the wife’s suggested daily penalty may be the only way to compel his full disclosure. As a result, the court set a new deadline or his full and complete disclosure and ordered that the husband face a penalty of $500 per day of non-disclosure after that date. The court expressed clear frustration with the husband’s explanations for non-disclosure, stating:

Most of the outstanding items are easy to obtain.  The husband simply has to write to financial institutions to request the information.  If it cannot be provided, the institution can provide this response.  The husband has to provide to the wife with copies of the requests and the responses.  This is basic family law practice… The husband knows how to prepare a financial statement.  Considering the passage of time, he should have been able to provide values for his assets and liabilities well before now.

This is the sixth court order requiring disclosure.  Given the husband’s litigation history, I agree with the wife that the prospect of compliance with this order is very poor unless stiff consequences are imposed.  These circumstances are exceptional and egregious.

It remains to be seen what effect the sanctions will have, but it may prove an effective option for spouses who refuse to comply with financial disclosure obligations in family disputes. Presumably, when all is said and done, the husband will also be required to cover any and all costs associated with the unnecessary delay of this matter.

For spouses who suspect that their former partner may be hiding or otherwise obfuscating assets in order to affect support findings, it is important to take action. There are practices that can be employed in order to locate assets such as the use of financial experts or forensic accountants. If you suspect that your former partner may be hiding assets, speak with an experienced family law lawyer right away to explore your options.

At Baker & Company, our Toronto family law lawyers are highly experienced in high-conflict divorce matters and support litigation. We are committed to making the process of legally addressing a family matter as clear and approachable as possible. Call us at 416-777-0100 or contact us online for a consultation.

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Domestic Agreements Family Law Support Claims

Spousal Support Release Clauses: When Will They be Set Aside?

When a couple agrees to forego spousal support as part of a separation agreement, a court is generally reluctant to order a change. However, if a clause is deemed unfair in light of the circumstances, a court may step in to restore equity between the parties. This was the case in a recent decision of the Ontario Court of Appeal when the court had to consider whether to uphold a support release clause or set it aside.

Background Facts

The husband and wife had been married for 18 years and separated in 2008. The couple had two children. The following year, the couple executed a separation agreement which stated that the husband would be responsible for paying a disproportionate amount of the couple’s shared debts. As a result, the couple agreed that the husband would not be responsible to pay child support to the mother, who remained in the matrimonial home with the two children. The parties also released all rights to spousal support via a spousal support release clause.

The debts assigned to the husband exceeded his assets by over $500,000. The husband had become unemployed prior to executing the separation agreement. At one point, he stopped paying the debts and the wife took responsibility for them herself. At this point, she had assumed full financial responsibility for the couple’s children, the mortgage on the matrimonial home and over half of the couple’s shared debts.

The husband did not become re-employed, and three years after executing the agreement, the husband sought to challenge it, seeking an equalization payment, which he later amended to a lump-sum spousal support award. The trial judge did not see a reason to set aside the agreement in full, however using the reasoning from Miglin v. Miglin, found that the husband was entitled to a lump-sum payment of $143,933, as the spousal support waiver did not fully align with protections under the Divorce Act.

The Court of Appeal

Both parties appealed the lower court decision. The husband argued that the trial judge had erred in not setting aside the agreement in full, while the wife appealed the support award, arguing that the spousal support release clause should be honoured.

The Court of Appeal rejected the husband’s appeal and also upheld the support award. The trial judge had found that the release clause did not align with the objectives of the Divorce Act because, at the time of execution, it had been highly unlikely the husband would be able to support himself while assuming responsibility for over $600,000 in debt.

The trial judge had also correctly identified a material change in circumstances between the time that the agreement had been executed and the support award. The husband had been unable to secure new employment after being terminated from his previous job and was unable to become self-sufficient as a result.

Based on the husband’s need for support and the wife’s means to pay support, the trial judge had correctly set aside the support release clause and awarded the lump sum payment to the husband.

This case makes clear that while couples are entitled to enter into any agreement they wish upon separating, the clauses within cannot contravene statute-based protections for either party. If an agreement, or a portion of it, is deemed inequitable under the legislation, a court will set the agreement or clause aside. Seeking skilled input and guidance from a family law lawyer when drafting such an agreement will help to ensure that the agreement will be in compliance with all relevant legislation.

At Baker & Company, our Toronto family law lawyers are highly experienced in high-conflict divorce matters and support litigation. We are committed to making the process of legally addressing a family matter as clear and approachable as possible. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Family Law High Conflict Divorces Support Claims

Does a Wife’s Failure to Work After Divorce Constitute a Material Change?

In a recent decision, the Ontario Court of Appeal (ONCA) was asked to consider whether a wife’s failure to seek employment for over 20 years post-divorce constituted a material change sufficient to vary her former husband’s spousal support obligations from $4,000 per month to $1 per month.

Background of the Case

The couple had married in 1968 and separated in 1985. At the time of their divorce, the husband was a successful dentist, earning between $250,000 and $300,000 per year. The wife did not work outside of the home, other than some bookkeeping work for her husband’s dental practice during the marriage. Prior to the separation, the wife had successfully undergone treatment for breast cancer.

In 1991, the parties entered into a settlement agreement which formed part of their Divorce Judgment. As part of the settlement, the parties agreed that the husband would pay the wife spousal support in the amount of $4,000 per month for her lifetime.

The Superior Court of Justice Decision

In 2017, the husband brought a motion seeking a number of orders, including a variation of his spousal support obligations. At over 70 years of age, the husband had retired from his dental practice, and his income had changed significantly. In retirement, he earned approximately $65,000 per year, plus some additional income from an open investment. The husband’s motion argued that his support obligations should be terminated based on the material change to his income, as well as the fact that his former wife had failed to seek other employment in the many years since their divorce.

The husband argued that the wife had received a staggering amount of support over the years, especially given that they had been divorced longer than they had been married. In turn, the wife pointed to the 1991 settlement, asserting that her husband had agreed to pay the support for her lifetime, perhaps taking a gamble on her health prospects given her medical history.

The judge found that there had been two material changes to the circumstances, warranting a variation in the husband’s support obligations. The first of which being the change to the husband’s income post-retirement, and the second being the wife’s failure to seek other employment following the divorce:

The case law is clear that there is no “duty” on the wife to become self-sufficient.  However, there is an obligation on her as a spousal support recipient to make reasonable efforts to contribute to her own support.

The judge ordered that the wife’s support entitlement be reduced from $4,000 per month to $1 per month.

The Ontario Court of Appeal

The wife appealed the decision, arguing that the original settlement agreement was not susceptible to amendment, as it had clearly stated the payments were to continue for her lifetime. The ONCA disagreed that the agreement could not be changed, but it did find that the original judge had erred in two ways:

  1. In considering what constituted a “material change” in circumstances, and
  2. In failing to give deference to the original agreement between the parties.

With respect to the material change argument, the ONCA did agree that the husband’s retirement and subsequent income reduction reflected a material change in circumstance. However, they disagreed that the same could be said about the wife’s failure to seek or secure employment in the intervening years since the divorce:

We disagree that the appellant’s failure to seek employment since 1991 constitutes a material change in circumstances. The clear wording of the divorce judgment was that spousal support would continue to death. The appellant was entitled to rely upon that judgment. The respondent waited far too long to raise the appellant’s decision not to seek gainful employment until an age when she was effectively precluded from correcting the situation.

What Does This Mean for Support Awards Going Forward?

This decision highlights the importance of contemplating long-range circumstances when designing and drafting a separation agreement. In the case at hand, the couple had not contemplated future changes in income, retirement, or any expectations that the wife to mitigate her own expenses. When entering into a separation agreement or divorce settlement, it is important to take all potential considerations into account in order to allow for future adjustments as circumstances may dictate. An experienced and skilled family law lawyer will be sure to point out relevant concerns in order to draft a document that allows for flexibility and reasonable amendments as needed in order to protect their client’s interests.

At Baker & Company, our Toronto family law lawyers are highly experienced in high-conflict divorce matters and support litigation. We are committed to making the process of legally addressing a family matter as clear and approachable as possible. Call us at 416-777-0100 or contact us online for a consultation.