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Spousal Support Advisory Guidelines:
A Draft Proposal

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Spousal support guidelines can be structured in many different ways. For those who are interested, the Background Paper reviews in detail other models of spousal support guidelines. This chapter presents a structural overview of the scheme of advisory guidelines that we are proposing. Some of what you will find here has already been touched on, in a less systematic way, in Chapters 2 and 3. As well, many of the individual components of the advisory guidelines will be discussed more extensively in subsequent chapters. However, we thought it would be helpful for readers to have a sense of the big picture at the beginning.

We begin with a discussion of the basic concept of income sharing on which the advisory guidelines are constructed and then move into an organized, step by step review of the specific components of the advisory guidelines. We have divided this review into three main sections. First, we deal with the preliminary issues that arise prior to any consideration of the formulas—what might be called issues of application. Then we deal with the basic structure of the income-sharing formulas for determination of amount and duration of support that are at the heart of the proposed approach. The outcomes generated by the formulas are not necessarily determinative, however. The final section deals with the possibilities for restructuring the formula outcomes (by trading off amount against duration), and for departing from the amounts and durations generated by the formulas, through exceptions.

4.1 Income Sharing

The core concept on which these spousal support advisory guidelines are built is income sharing. Budgets will no longer play a primary role in determining spousal support outcomes. Instead the advisory guidelines will look to the incomes of the parties and rely on a mathematical formula to determine the portion of spousal incomes to be shared. Contrary to common perception, income sharing does not mean equal sharing. There are many ways of sharing income; it all depends on the formula that is adopted.

You will see below that other factors are also relevant in determining support outcomes under the proposed advisory guidelines, such as the presence of dependent children or the length of the marriage. But the income levels of the parties and, and more specifically the income disparity between them, become the primary determinants of support outcomes. Under the spousal support advisory guidelines, as under the child support guidelines, the precise determination of income, including the imputing of income, will undoubtedly become a much more significant issue than it has in the past.

Income sharing is not a new theory of spousal support. As we have noted earlier, the advisory guidelines project is not driven by a desire to theoretically reorder the law of spousal support. Rather it is driven by the practical needs of family law practitioners and judges who deal with the daily dilemmas of advising, negotiating, litigating and deciding spousal support.

It is therefore important to emphasize that the use of income sharing as a method for determining the amount of spousal support does not necessarily imply adoption of the income-sharing theories of spousal support identified in the Background Paper. Some of these theories, which are admittedly contentious, rest upon a view of marriage as a relationship of trust and community, which justifies treating marital incomes as joint incomes.

However, the method of income sharing can be used as a practical and efficient way of implementing many support objectives such as compensation for the economic advantages and disadvantages of the marriage or the recognition of need and economic dependency. Such use of proxy measures already exists in spousal support law—think of the prevalent use of standard of living and a needs and means analysis to quantify compensatory support.

These proposed guidelines do not commit to any particular theory of spousal support. As will become clear in the discussion of the different formulas under these advisory guidelines, they aim to accommodate the multiple theories that now inform our law and, to generate results that are in broad conformity with existing patterns in the law.

We now move on to an overview of the basic framework of the specific scheme of income sharing found in the proposed advisory guidelines.

4.2 Preliminary Issues—The Applicability of the Advisory Guidelines

4.2.1 Form and force

Unlike the Federal Child Support Guidelines, the proposed spousal support advisory guidelines will not be legislated. Following the practice in some American jurisdictions, these are informal guidelines. They are not legally binding. Their use is completely voluntary. They will be adopted on a voluntary basis by lawyers and judges to the extent they find them useful, and will operate as a practical tool within the existing legal framework. As non-legislated, informal guidelines, these guidelines are advisory only. They are intended as a starting point for negotiation and adjudication.

Courts and lawyers will certainly be free to order or negotiate spousal support outcomes that differ from those generated by the advisory guidelines. However, we hope that the advisory guidelines will have significant voluntary buy-in because of their usefulness—because of the structure and consistency they provide and because they are perceived to generate appropriate outcomes. If so, the advisory guidelines might develop some presumptive force, in the loose sense of the word, such that parties would have to make arguments for departing from the starting point provided by the formulas. The advisory guidelines also explicitly set out a series of exceptions, albeit not exhaustive, providing a structured framework for departures from the formulas.

The informal and voluntary nature of these advisory guidelines has been dealt with more extensively in chapters 2 and 3.

4.2.2 Entitlement

The proposed advisory guidelines do not deal with entitlement. The informal status of the proposed guidelines means that they must remain subject to the entitlement provisions of the Divorce Act, notably ss. 15.2(4) and (6) as interpreted by the courts. Entitlement therefore remains a threshold issue to be determined before the guidelines will be applicable. On its own, a mere disparity of income that would generate an amount under the advisory guidelines, does not automatically lead to entitlement.

The advisory guidelines were drafted on the assumption that the current law of spousal support, post-Bracklow, offers a very expansive basis for entitlement to spousal support. Effectively any significant income disparity generates an entitlement to some support, leaving amount and duration as the main issues to be determined in spousal support cases. However, our proposed guidelines leave the issue of when an income disparity is significant, in the sense of signaling entitlement, to the courts. It is open to a court to find no entitlement on a particular set of facts, despite income disparity, and these advisory guidelines do not speak to that issue.

We recognize that the advisory guidelines may, over time, shape understandings of entitlement. But this would be part of the normal evolution of the law in this area, controlled by the courts. It is also possible that the law of entitlement may change over time in other directions, if the Supreme Court of Canada or an appellate court were to decide to narrow or refine Bracklow.

4.2.3 Application to agreements

The advisory guidelines do not deal with the effect of a prior agreement on spousal support. This issue, like entitlement, is outside the scope of the advisory guidelines and will continue to be dealt with under the evolving law guided by the Supreme Court of Canada’s recent decision in Miglin.[13]

When the Federal Child Support Guidelines were brought into force, changes were made to the Divorce Act providing, in essence, that the Guidelines would prevail over child support agreements inconsistent with the Guidelines. No such change is proposed here, given the informal nature of these guidelines.

We do expect, however, that the advisory guidelines will play an important role in the negotiation of agreements by providing a more structured framework for negotiation and some benchmarks of fairness. One possible effect of the advisory guidelines might thus be a reduction in the number of agreements that are subsequently perceived to be unfair by one of the parties. Another might be that courts will be better able to identify unfair agreements when an agreement is subsequently challenged.

Further discussion of the application of the advisory guidelines in the cases where there are spousal support agreements can be found in Chapter 10.

4.2.4 Interim orders

The advisory guidelines are intended to apply to interim orders as well as final orders. We anticipate, in fact, that they will be particularly valuable at the interim stage, which is now dominated by a needs-and-means analysis—budgets, expenses and deficits that require individualized decision making. In many American jurisdictions, guidelines were developed only for the interim stage.

Any periods of interim support clearly have to be included within the durational limits set by the advisory guidelines. Otherwise, if duration were only to be fixed in final orders, there would be incentives in both directions—for some to drag out proceedings and for others to speed them up—and general inequity.

The advisory guidelines do recognize that the amount may need to be set differently during the interim period while parties are sorting out their financial situation immediately after separation. To accommodate these short-term concerns, the advisory guidelines recognize an exception for compelling financial circumstances in the interim period.

Interim support is dealt with more extensively in Chapter 8.

4.2.5 Review and variation

The primary application of these advisory guidelines is to initial determinations of spousal support at the point of separation or divorce, whether through negotiated agreements or court orders. Ideally a truly comprehensive set of advisory guidelines would apply not only to the initial determination of support but also to subsequent reviews and variations over time. However, these issues have proven the most difficult to reduce to a formula given the uncertainty in the current law concerning the effect of post-separation income changes.

In the end, we chose a more modest course, identifying certain situations where the advisory guidelines will apply on reviews and variations, including increases in the recipient’s income and decreases in the payor’s income. We have left others, such as post-separation increases in the payor’s income, re-partnering, remarriage and second families, to discretionary determinations under the evolving framework of current law. Developing advisory guidelines to deal with some of these difficult issues may take place at a later stage of the project, after there has been some experience with these proposed advisory guidelines.

The application of the advisory guidelines in the context of review and variation is dealt with more extensively in Chapter 10.

4.2.6 Application to provincial/territorial law

The proposed advisory guidelines have specifically been developed under the federal Divorce Act and are intended for use under that legislation. Provincial/territorial support law is governed by distinct statutory regimes. However, in practice there is much overlap between federal and provincial/territorial support laws.

The broad conceptual framework for spousal support articulated by the Supreme Court of Canada in Moge and Bracklow has been relied upon under both provincial and federal legislation. Indeed Bracklow, which combined claims under the Divorce Act and provincial legislation, made no real distinction between the two. Given this overlap, it is possible that the advisory guidelines might be used under provincial/territorial support legislation.

The proposed advisory guidelines are informal and not binding. They will be used only to the extent that lawyers, judges and mediators find them to be a helpful tool in spousal support determinations. Because they establish ranges for amount and duration, the spousal support advisory guidelines offer a fair amount of flexibility to accommodate any distinctive patterns under provincial/territorial law, just as they are able to respond to local variation under the Divorce Act. As well, departures from the advisory guidelines are always possible if the results generated by the formulas are inappropriate in the context of provincial/territorial support regimes.

We recognize that there are some clear differences between provincial/territorial support laws and the Divorce Act. Many provincial/territorial laws have specific provisions governing entitlement that would constrain the operation of the advisory guidelines. However the proposed advisory guidelines only deal with amount and duration, and not entitlement. Also, provincial/territorial statutes often include specific provisions governing the effect of agreements. However, because the advisory guidelines do not deal with the effect of agreements there will be no conflict.

Provincial laws also differ from the Divorce Act in their application to unmarried couples but this will not cause any difficulties with respect to the operation of the advisory guidelines. Although we conveniently referred to length of marriage as a relevant factor in the operation of the formulas, they actually rely upon the period of spousal cohabitation (including periods of pre-marital cohabitation), thus providing for easy meshing with provincial/territorial legislation.

It is important to keep in mind when reading this document that the draft advisory guidelines were not specifically developed for the provincial/territorial context; they were developed for use under the Divorce Act.

4.2.7 Application to same-sex marriages

At the time of writing of this Draft Proposal, the Divorce Act had not been amended to extend to married same-sex couples the rights to seek divorce and corollary relief. If those amendments are made, the advisory guidelines would have the same application to same-sex couples whose marriages have broken down and who are seeking spousal support under the Divorce Act, as they do to opposite-sex married couples. Provincial/territorial support laws, which cover unmarried couples, do apply to same-sex relationships that satisfy the statutory conditions for entitlement.

4.3 The Formulas

The advisory guidelines are constructed around two basic income-sharing formulas, rather than just one formula.

4.3.1 Categories of marriages: with and without children

The advisory guidelines are structured around a fundamental distinction between marriages where there are no dependent children and those where there are; or more specifically around the distinction between cases where there is no concurrent child support obligation, and those where there is. The result is two different formulas.

In cases where there are no dependent children, what we have called the without child support formula applies. This formula relies heavily upon length of marriage—or more precisely, the length of relationship, including periods of pre-marital cohabitation—to determine both the amount and duration of support. Both amount and duration increase with the length of the relationship. This formula is constructed around the concept of merger over time which offers a useful tool for implementing both compensatory and non-compensatory support objectives in cases where there are no dependent children in a way that reflects general patterns in the current law.

Under the basic without child support formula:

  • The amount of spousal support is1.5 to 2 percent of the difference between the spouses’ gross incomes for each year of marriage.
  • Duration is .5 to 1 year of support for each year of marriage, with duration becoming indefinite after 20 years.

The without child support formula is discussed in detail in Chapter 5.

In cases where there are dependent children, an alternative formula—the with child support formula—applies. The distinctive treatment of marriages with dependent children and concurrent child support obligations is justified by both theoretical and practical considerations and is reflected in current case law.

On the theoretical front, marriages with dependent children raise strong compensatory claims based on the economic disadvantages flowing from assumption of primary responsibility for child care, not only during the marriage, but also after separation. We have identified this aspect of the compensatory principle as it operates in cases involving dependent children as the parental partnership principle, and have drawn on this concept in structuring the with child support formula.

The parental partnership principle is reflected in s. 15.2(6)(c) of the Divorce Act, which specifically directs that a spousal support order should 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. The Federal Child Support Guidelines do not fully take into account the indirect costs of child-rearing, leaving such costs to be compensated for by spousal support. For marriages with dependent children, length of marriage is not the most important determinant of support outcomes as compared to post-separation child-care responsibilities.

On the practical front, child support must be calculated first and given priority over spousal support. As well, the differential tax treatment of child and spousal support must be taken into account, complicating the calculations. Our with child support formula thus works with computer software calculations of net disposable incomes, of the kind often used now by lawyers and judges.

Under the basic with child support formula:

  • Spousal support isan amount that will leave the recipient spouse with between 40 and 46 percent of the spouses’ net incomes after child support has been taken out. (We refer to the spouses’ net income after child support has been taken out as Individual Net Disposable Income or INDI).
  • The approach to duration under this formula is more complex and flexible than under the without child support formula and relies upon both length of marriage and duration of the post-separation child-rearing period.

The with child support formula is discussed in detail in Chapter 6.

4.3.2 Length of marriage

Under the advisory guidelines length of marriage is a primary determinant of support outcomes in cases without dependent children. Under the without child support formula the percentage of income sharing is sensitive to and increases with length of the marriage; the same is true of duration of support.

Length of marriage is much less relevant under the with child support formula although it still plays some role in determining duration under that formula.

Given the relevance of length of marriage under the advisory guidelines, it is important to clarify its meaning. While we use the convenient term length of marriage, the more accurate description is the length of the relationship, which includes periods of pre-marital cohabitation, and ends with separation.

In discussing the development and operation of the advisory guidelines we have sometimes classified marriages according to 3 categories based on length—short (under 5 years); medium (5-19 years); and long (20 years plus). The main value of these categories comes in determining the duration of support, or in thinking about the kinds of circumstances that will call for exceptions to the without child support formula.

These categories correspond to those implicitly underlying the current law and outcomes. Current law shows a fair amount of consistency in approach with respect to long and short marriages without dependent children; medium duration marriages without children generate much more uncertainty. Not surprisingly, the development of advisory guidelines for that category of cases proved the most difficult.

4.3.3 Duration

The proposed advisory guidelines attempt to offer a formula for the determination of the duration as well as the amount of awards. Although judges and lawyers often see amount and duration as distinct issues, they are related; the two elements combined determine the total or global amount of a support award.

The proposed advisory guidelines set out the presumptive conditions for indefinite support. In other cases they establish time limits on the duration of awards. In particular, time limits are a significant feature of the without child support formula. They play a less significant, or softer, role under the with child support formula.

Time limits are admittedly a problem under the current law in Canada. After Moge, time-limited orders became less and less common. After Bracklow, some judges have brought back time limits, at least for non-compensatory support orders. While time limits are still frequently negotiated by parties in agreements and consent orders, many courts still frown upon time limits for all but short marriages.

Duration remains highly uncertain under the current law, particularly in medium duration marriages. The issue of duration is often put off to the future, to be dealt with through ongoing reviews and variations. Under current practice, uncertainty about duration can generate low monthly awards, as judges or lawyers fear that any monthly amount ordered or agreed upon could continue for a long time, even indefinitely.

In our view, reasonable time limits are an essential element of spousal support advisory guidelines intended to promote greater certainty, especially if the guidelines generate reasonable monthly amounts. The time limits generated by our formulas are potentially very generous; in marriages of medium duration they can extend for periods of up to 19 years. These time limits are thus very different from the short and arbitrary time limits, typically of between three to five years, that became standard under the clean-break model of spousal support. Once marriages are of any significant length, our time limits operate in conjunction with generous monthly amounts.

If current law cannot allow what we view to be the reasonable and potentially quite generous time limits proposed by the advisory guidelines, then the advisory guidelines will have to be re-designed and the amounts generated by the formulas lowered. Amount and duration are interrelated parts of the formulas—they are a package deal. Using one part of the formula without the other would undermine the integrity and coherence of our proposed approach. The advisory guidelines do provide for restructuring, which allows duration to be extended by lowering the amount of support.

4.3.4 Ranges

The advisory guidelines do not generate a fixed figure for either amount or duration, but instead produce a range of outcomes that provide a starting point for negotiation or adjudication. The ranges we have been able to develop for duration under the without child support formula are particularly broad, reflecting the variation and uncertainty in current practice. After some period of experience with the advisory guidelines, some tightening of these may be possible.

Ranges create scope for more individualized decision making, allowing for argument about where a particular case should fall within the range in light of the Divorce Act’s multiple support objectives and factors. Ranges can also accommodate some of the variations in current practice, including local variations in spousal support cultures.

4.3.5 Determining income

Income-sharing schemes work directly off income, as income levels essentially determine the amount of support to be paid. Under these advisory guidelines, the accurate determination of income will become a much more significant issue in spousal support cases than it has in the past, and there will be more incentives to dispute income. However, because these advisory guidelines generate ranges and not specific amounts, absolute precision in the determination of income may not be as crucial as under the Federal Child Support Guidelines. Many cases will involve combined claims for child and spousal support, where a precise determination of income is already required for child support purposes.

The starting point for the determination of income under both our proposed formulas is the definition of income under the Federal Child Support Guidelines, including the Schedule III adjustments. This is consistent with current practice. In cases involving combined claims for child and spousal support, the payor’s income, as determined under the Federal Child Support Guidelines, is also the basis for assessing spousal support.

These advisory guidelines do not solve the complex issues of income determination that arise in cases involving self-employment income and other forms of non-employment income. These are difficult cases under the Federal Child Support Guidelines and will remain so under these spousal support advisory guidelines. In determining income it may be necessary, as under the Federal Child Support Guidelines, to impute income in situations where a spouse’s actual income does not appropriately reflect his or her earning capacity. In some cases the issue will be imputing income to the payor spouse; on variations and reviews the issue may be imputing income to the recipient spouse if it is established that the he or she has failed to make appropriate efforts towards self-sufficiency.

Imputing income is the appropriate tool under the advisory guidelines to deal with concerns about any disincentives to self-sufficiency created by generous amounts of spousal support, especially at higher income levels. In current practice, self-sufficiency concerns often result in downward adjustments of amount in initial orders. Under these advisory guidelines, the amount of support is determined by spousal incomes and such loose adjustments are not possible. If a spouse is failing to realize his or her earning capacity, income at the appropriate level can be imputed subsequently at the stage of review or variation.

4.3.6 Net vs. gross income

Existing guideline models vary, using both gross (before tax) and net (after tax) incomes in their income-sharing formulas. Good arguments can be made in favour of each method of calculating income.

Gross income is more readily calculated, without software, and more easily understood by most spouses. Gross income is also consistent with the Federal Child Support Guidelines.

Net income figures are more accurate and deal more effectively with the differential tax treatment of child and spousal support and the various tax benefits that accrue when there are children. Computer software, upon which many judges and lawyers have come to rely, also works with net income in calculations of monthly cash flow.

In the end, we have chosen to use different methods of calculating income under the two formulas:

  • The without child support formula, which applies in cases where there are no dependent children of the marriage and hence no concurrent child support obligations, utilizes gross income in the interests of ease of calculation.
  • The with child support formula relies upon net income calculations.

Both formulas generate a gross amount of spousal support that will be subject to the current deduction/inclusion rules for tax purposes. These advisory guidelines, given their informal status, do nothing to change the current tax treatment of spousal support.

The definitions of income used under each of the formulas are discussed in more detail in Chapters 5 and 6.

4.3.7 Ceilings and floors

As with the Federal Child Support Guidelines, the spousal support advisory guidelines establish ceilings and floors in terms of the income levels to which they are applicable. These advisory guidelines allow more flexibility in amounts over a certain ceiling (as with incomes over $150,000 under the Federal Child Support Guidelines) and fix a floor below which spousal support is not payable (like the $7,000 floor under the Federal Child Support Guidelines).

As under the Federal Child Support Guidelines, we have set both the ceiling and the floor by reference to the annual gross income of the payor. The ceiling has been set at a gross annual income for the payor of $350,000 and the floor at a gross annual income of $20,000.

Ceiling and floors are dealt with more extensively in Chapter 7.

4.4 After the Formulas Have Been Applied: Issues of Restructuring and Exceptions

Under the advisory guidelines there is still much room for the exercise of discretion to respond to the facts of particular cases. As discussed above, there is considerable room for discretion in the fixing of precise amounts and durations within the ranges generated by the formulas. Here we discuss two further opportunities for the exercise of discretion under our proposed approach: one is the ability to restructure the formula outcomes by trading off amount against duration; the other is the possibility of departing from the formula outcomes by relying upon exceptions.

4.4.1 Restructuring

Although the formulas generate separate figures for amount and duration, the advisory guidelines explicitly recognize that these awards can be restructured by trading off amount against duration. Such tradeoffs are commonly made in separation agreements and consent orders. The advisory guidelines also recognize that judges may adjust amount and duration in a similar way.

In Bracklowthe Supreme Court of Canada explicitly recognized that the amount and duration of awards can be configured in different ways to yield awards of similar value (what the Court called quantum). Thus the Court noted that an order for a smaller amount paid out over a long period of time can be equivalent to an order for a higher amount paid out over a shorter period of time.

Restructuring can be used in three ways:

  • to front-end load awards by increasing the amount beyond the formulas’ ranges and shortening duration;
  • to extend duration beyond the formulas’ ranges by lowering the monthly amount; and
  • to formulate a lump sum payment by combining amount and duration.

We anticipate that in many cases where the outcomes generated by the formulas initially appear to be inappropriate, the issue will be resolved through restructuring. This was our experience in developing the formulas. When restructuring is relied upon to resolve issues of inappropriate formula outcomes, awards remain consistent with the overall or global amounts generated by the advisory guidelines. Restructuring thus does not involve an exception or departure from the formulas.

Restructuring is dealt with in more detail in both Chapters 5 and 6 in the context of the discussions of the two formulas. Because restructuring will have more application in cases being dealt with under the without child support formula the more extensive discussion will be found in Chapter 5.

4.4.2 Exceptions

The formulas are intended to generate appropriate outcomes in the majority of cases. We recognize, however, that there will be cases where the formula outcomes, even after consideration of restructuring, will not generate results consistent with the support objectives and factors under the Divorce Act. The formulas are intended to generate appropriate results in a wide range of typical cases; exceptions are required for unusual cases.

The informal, advisory nature of these guidelines means that the formula outcomes are never binding and departures are always possible on a case by case basis where the formula outcomes are found to be inappropriate. The advisory guidelines do, however, itemize a series of exceptions which, although clearly not exhaustive, are intended to assist lawyers and judges in framing and assessing departures from the formulas. The exceptions create room both for the operation of competing theories of spousal support and for consideration of the particular factual circumstances in individual cases where these may not be sufficiently accommodated by restructuring.

The exceptions include, for example, a compensatory exception that allows for awards of greater value than those generated by the formula in shorter marriages where there have been economic losses as a result of the marriage or contributions to the other spouse’s career that are disproportionate to the length of the marriage. The inability to be self-supporting because of illness or disability may also constitute an exception, as may disproportionate responsibility for marital debts or support obligations to children and spouses from prior relationships.

As with restructuring, exceptions are dealt with in more detail in Chapters 5 and 6 in the context of the discussions of the two formulas.