Spousal Support Advisory Guidelines:
A Draft
Proposal
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Here we examine the first of the two basic formulas that lie at the
core of our proposed advisory guidelines—the without child
support formula. This formula applies in cases where there are no
dependent children and hence no concurrent child support obligations.
Assuming entitlement, the formula generates ranges for amount and duration
of spousal support.
This formula covers a diverse range of fact situations, the only
unifying factor being the absence of a concurrent child support obligation
for a child or children of the marriage.[14] In thinking about the application of this formula
we divided marriages without dependent children into three loose
categories based on length: short (under 5 years); medium (5 to
19 years); and long (20 years plus).
The without child support formula covers marriages of all
lengths where the spouses never had children. The formula also applies to
long marriages where there were children, but they are no longer
dependent.
It might seem impossible to develop one formula that could yield
appropriate support outcomes over such a wide array of marital situations.
We turned to the concept of merger over time,which the American Law
Institute (ALI) relied upon in developing its guidelines and which we
discuss in more detail below. Put simply, the idea is that as a marriage
lengthens, spouses more deeply merge their economic and non-economic
lives, resulting in greater claims to the marital standard of living.
Using that concept, which relates support outcomes to the length of the
marriage, we developed a formula that surprisingly generates results
consistent with much of current practice, while bringing some much-needed
structure.
In what follows we first describe the basic structure of the formula.
Then we discuss the concept of merger over time that underlies the formula
and its relation to existing rationales for spousal support. This is
followed by a more detailed examination of the various steps involved in
applying the formula, and a series of examples illustrating its
application. In the final section of this chapter, we examine three issues
that arise after the formula has generated its ranges for amount and
duration: first, how to fix precise amounts and time periods within the
ranges generated by the formula; second, whether the formula outcomes
should be restructured by trading off amount against duration; and third,
whether the circumstances of a given case fall within an exception
warranting a departure from the formula outcomes.
Set out in the box below, in its most basic form, is the proposed
formula for determining spousal support in cases where there is no child
support being paid, after entitlement has been established. The formula is
in fact two formulas—one for amount and one for duration. The formula
generates ranges for amount and duration, rather than fixed
numbers. As you will see, there are two crucial factors under the formula.
One is the gross income difference between the spouses. The other
is the length of the marriage, or more precisely, as will be
explained below, the length of the period of cohabitation. Both amount and
duration increase incrementally with the length of marriage.
Keep in mind that the formula is intended to apply to initial
determinations of support at the point of separation or divorce, using
the spouses’ incomes at the time the support is being determined by a
court or negotiated by the parties.[15] Orders made under the advisory guidelines will be
subject to variation in light of changing circumstances over time.
They may also include provisions for review. A subsequent review or
variation may result in changes to amount and/or duration in the future.
Similarly, parties negotiating agreements in accordance with the advisory
guidelines may include provisions for review or variation. The extent to
which the advisory guidelines will apply to re-determinations of spousal
support upon review and variation is dealt with in Chapter 10.
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The Without Child Support Formula
Amount ranges from 1.5 to 2 percent of the difference
between the spouses’ gross incomes (the gross income
difference) for each year of marriage, (or more precisely, years
of cohabitation), up to a maximum of 50 percent. The range
remains fixed for marriages 25 years or longer, at 37.5 to
50 percent of income difference.
Duration ranges from .5 to 1 year for each year of
marriage. However support will be indefinite if the marriage
is 20 years or longer in duration or, if the marriage
has lasted five years or longer, when years of marriage and age of
the support recipient (at separation) added together total 65 or
more (the rule of 65). |
A simple example illustrating the basic operation of the without
child support formula will be helpful at this point before we venture
further into its more complex details. The primary purpose of this example
is to show the basic calculations required under the formula and to give a
sense of the outcomes the formula generates. Keep in mind that
the outcomes generated by the formula are only the first step in
determining spousal support under the advisory guidelines. There are
other important steps in the analysis that will be discussed below.
Example 5.1
Arthur and Ellen have separated after a 20-year marriage and one
child. During the marriage Arthur, who had just finished his commerce
degree when the two met, worked for a bank, rising through the ranks and
eventually becoming a branch manager. He was transferred several times
during the course of the marriage. His gross annual income is now
$90,000. Ellen worked for a few years early in the marriage as a bank
teller, then stayed home until their son was in school full time. She
worked part time as a store clerk until he finished high school. Their
son is now independent. Ellen now works full time as a receptionist
earning $30,000 gross per year. Both Arthur and Ellen are in their mid
forties.
Assuming entitlement has been established in this case, here is how
support would be determined under the without child support
formula.
To determine the amount of support:
- Determine the gross income difference between the parties:
$90,000 - $30,000 = $60,000
- Determine the applicable percentage by multiplying the
length of the marriage by 1.5-2:
1.5 X 20 years = 30 percent
to
2 X 20 years = 40
percent
- Apply the applicable percentage to the income difference:
30 percent X $60,000 = $18,000/year
($1,500/month)
to
40 percent X $60,000 = $24,000/year
($2,000/month)
Duration would be indefinite in this case because the length
of the marriage was 20 years.
Thus, assuming entitlement, spousal support under the formula
would be in the range of $1,500 to $2,000 per month for an indefinite
duration, subject to variation and possibly review.
An award of $1,500 per month, at the low end of the range, would leave
Ellen with a gross annual income of $48,000 and Arthur with one of
$72,000. An award of $2,000 per month, at the high end of the range, would
leave Ellen with a gross annual income of $54,000 and Arthur with one of
$66,000. We will deal below with the factors that determine the setting of
a precise amount within that range.
5.1.1 The formula for
amount
Several aspects of the formula for amount should be noted. First, this
formula uses gross income (i.e. before tax) figures rather than net
(i.e. after tax), with income defined in the same way as under the
Federal Child Support Guidelines. While net income figures may be
marginally more accurate, in our view familiarity and the ease of
calculation (no need for software) tipped the scales in favour of using
gross income figures. As you will see in Chapter 6,
net income figures are used under our alternate with child support
formula because of the need to deal with the differential tax treatment of
spousal and child support.
Second, this formula applies a specified percentage to the income
difference between the spouses rather than allocating specified
percentages of the pool of combined spousal incomes. Here we drew
on the ALI proposals and the Maricopa County, Arizona guidelines inspired
by them, both discussed in the Background Paper. The income difference
between the spouses operates as a proxy measure of their differential loss
of the marital standard of living and, in long marriages where there have
been children, of the differential impact of marital roles on the spouses’
earning capacities. In applying income sharing to the spousal income
difference this formula once again differs from the with child
support formula where the use of net income figures requires a model
of income sharing that applies to a combined pool of spousal incomes.
Third, our formula for amount does not use a fixed or flat percentage
for sharing the income differential. Instead, drawing once again on the
ALI and Maricopa County guidelines and their underlying concept of merger
of time, our formula incorporates a durational factor to increase
the percentage of income shared as the marriage increases in length. The
durational factor we have chosen is 1.5 to 2 percent of the gross
income difference for each year of marriage.
We developed the ranges for amount by first determining the
point when maximum sharing would be reached, which we set at
25 years. We also started with the assumption that maximum sharing
would involve something close to equalization of incomes, or sharing
50 percent of the gross income difference. We then essentially worked
backwards to determine what level of income sharing per year would be
required to reach maximum sharing at year 25. The answer was
2 percent per year. In the course of developing the formula, we
experimented with different percentage ranges (such as 1 to
1.5 percent for each year of marriage), but the range of 1.5 to
2 percent provided a better fit with outcomes under current
practice.
We chose 50 percent of income difference (i.e. income
equalization) as the maximum level of income sharing, potentially
reached after 25 years of marriage and representing the full merger
of the spouses’ lives. Much time was spent considering the arguments for a
somewhat lower ceiling to take into account incentive effects and the
costs of going out to work in situations where only the payor is employed.
Other possibilities we considered were 45 percent of income
difference reached at 22.5 years or 48 percent reached at
24 years. However, we also recognized that there would be cases where
equalization of income would be appropriate (for example where only
pension income is being shared after a very long marriage, or perhaps
where both spouses are employed after a long marriage, but with a
significant income disparity). We drafted the formula to allow for that
possibility.
Even at the maximum level of sharing, the formula does not
require an award of 50 percent of the spousal income difference
after 25 years, but rather provides for awards in the range of
between 37.5 and 50 percent. Consistent with current law, the formula
does not generate a general rule of income equalization. It does, however,
reflect current patterns of generous support after a long marriage and is
consistent with the guideline for the quantification of spousal support
articulated in Moge—that of roughly equivalent standards of living
after a long marriage.
In assessing the formula for amount it is important to keep in mind
that the percentages are not percentages of the payor’s income;
they are percentages of the income difference between the spouses.
In cases where the recipient’s income is zero, the two measures will be
the same, but not in cases where the recipient has an income.
5.1.2 The formula for
duration
As with amount, duration under our proposed formula increases with the
length of marriage. Subject to the special provisions for indefinite
support, our formula generates:
- a minimum duration of half the length of the marriage and
- a maximum duration of the length of the marriage.
As with the formula for amount, this formula also draws on the ALI
proposals and the concept of merger over time. However, length of
marriage cannot be the only factor in determining duration for
marriages without dependent children; age is also a significant
factor as it affects the ability to become self-supporting.
The ranges for duration under this formula are admittedly very broad,
allowing for an award at the top end of the range that is effectively
double in value that at the bottom end. We regret that we were unable to
come up with a tighter range. Given the uncertainties surrounding duration
under the current law this was the best that was possible at this time. As
discussed in the Background Paper, Maricopa County encountered similar
difficulties in creating a formula for duration that aligned with existing
law. We hope that experience with the advisory guidelines may enable the
durational ranges to be narrowed over time.
We caution that if the durational limits, which we consider generous,
are increased, the formula would have to be redesigned and the amounts
decreased. Amount and duration are interrelated parts of the formula—they
are a package deal. Using one part of the formula without the other would
undermine its integrity and coherence. As discussed below, the advisory
guidelines provide for restructuring, which allows duration to be extended
by lowering the monthly amount of support.
5.1.2.1 The problem of time limits
The difficulties of developing guidelines for duration have already
been discussed in Chapter 4.
The without child support formula generates time limits in many
cases of marriages where there are no dependent children. Time limits
admittedly pose a problem under the current law, particularly in
medium-length marriages.
After Moge, time-limited orders became less common. Since
Bracklow, which recognized that a payor spouse was not necessarily
responsible for meeting all of a former spouse’s financial needs, 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 continue to frown
upon time limits in all but short marriages. Long marriages are typically
understood to generate indefinite support, but duration remains highly
uncertain in marriages of medium length.
In court orders, the issue of duration in medium-length marriages 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 of
support could continue for a long time, even indefinitely. On the other
hand, time limits are common in support agreements.
In our view, reasonable time limits are an essential element of spousal
support advisory guidelines for medium-length marriages, especially if the
guidelines are to generate reasonable monthly amounts. Bracklow
emphasized this interrelationship between amount and duration, recognizing
that a low award paid out over a lengthy period of time is equivalent to
an award for a higher amount paid out over a shorter period of time.
The time limits generated by our formula are potentially very generous;
in marriages of medium duration they can extend for 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, and which
Moge rejected. The time limits generated by these advisory
guidelines should be assessed in context—they are potentially for lengthy
periods of time and, once marriages are of any significant length, operate
in conjunction with generous monthly amounts.
5.1.2.2 Indefinite support
Our proposed formula provides that support will be for an
indefinite duration once the marriage has been
20 years or longer in length (the 20-year rule).
Current case law supports the idea that indefinite support is appropriate
after a long marriage. Indeed in parts of the country it is difficult to
time-limit support after 15 years of marriage.
By indefinite we simply mean that no time limit is placed on the
duration of the support in the initial order. An order for indefinite
support does not necessarily mean permanent support, and it certainly does
not mean that support will continue indefinitely at the level set by the
formula. Under the current law, orders for indefinite support are open
to variation as the parties’ circumstances change over time, and support
may even be terminated if the basis for entitlement disappears. Orders for
indefinite support may also have review conditions attached to them. The
advisory guidelines do nothing to change this, operating as they do within
the existing legal framework.
The formula also provides that indefinite support will be available
even in cases where the marriage is shorter than 20 years if
the years of marriage plus the age of the support recipient
at the time of separation equals or exceeds 65 (the rule of
65). Thus if a 10‑year marriage ends when the recipient is 55,
indefinite support will be available because years of marriage (10) plus
age (55) equals 65. This refinement to the formula for duration is
intended to respond to the situation of older spouses who were
economically dependent during a medium length marriage and who may have
difficulty becoming self-sufficient given their age. The rule of 65 for
indefinite support is not available in short marriages (under 5 years
in length) given the assumption in the current law that short marriages
generate limited support obligations.
We struggled with the issue of whether an age component should always
be required for indefinite support—i.e. whether the rule of 65 should
apply even in long marriages. Under a 20‑year rule with no age
requirement, for example, a 38‑year-old spouse leaving a 20‑year marriage
would be entitled to indefinite support. Some would argue that indefinite
support is not appropriate for a spouse who is still relatively young and
capable of becoming self-sufficient. If the rule of 65 were generally
applicable, support would not become indefinite even after a 20‑year
marriage unless the recipient were 45 years of age or older.
Several considerations led us to the conclusion that a 20-year rule
without any age requirement was the more appropriate choice. First, a
spouse who married young and spent the next 20 years caring for
children could be more disadvantaged than someone who married when they
were older and had been able to acquire some job skills before withdrawing
from the labour force. As well, under the current law it would be very
difficult to impose a time-limit on support after a 20-year marriage, even
if self-sufficiency and an eventual termination of support were
contemplated at some point in the future. The typical order would be an
indefinite order subject to review and/or variation. An order for
indefinite support under the advisory guidelines would be no different. As
under the current law, orders for indefinite support under the advisory
guidelines do not necessarily mean permanent support; they merely reflect
the inappropriateness of attempting to set a time limit on support in
initial orders.
The idea that underlies the without child support formula and
explains sharing income in proportion to the length of the marriage is
merger over time. We use this term, which we have taken from the
ALI proposals and discuss in more detail in the Background Paper, to
capture the idea that as a marriage lengthens, spouses merge their
economic and non-economic lives more deeply, with each spouse making
countless decisions to mould his or her skills, behaviour and finances
around those of the other spouse. Under our proposed formula, the income
difference between the spouses represents their differential loss of the
marital standard of living. The formulas for both amount and duration
reflect the idea that the longer the marriage, the more the lower-income
spouse should be protected against such a differential loss.
Under our proposed formula, short marriages without children will
generate very modest awards in terms of both amount and duration. In cases
where there are adequate resources, the support could be paid out in a
single lump sum. Medium duration marriages will generate transitional
awards of varying lengths and in varying amounts, increasing with the
length of the relationship. Long marriages will generate generous spousal
support awards on an indefinite basis that will provide the spouses with
something approaching equivalent standards of living after marriage
breakdown. Our formula generates the same ranges for long marriages in
which the couple have never had children as for long marriages in which
there have been children who are now grown.
While the label may be unfamiliar, the concept of merger over time,
which relates the extent of the spousal support claim to the length of the
marriage, underlies much of our current law. Its clearest endorsement can
be found in Justice L’Heureux-Dubé’s much-quoted passage from Moge:
Although the doctrine of spousal support which focuses on equitable
sharing does not guarantee to either party the marital standard of
living enjoyed during the marriage, this standard is far from irrelevant
to support entitlement … . As marriage should be regarded as a joint
endeavour, the longer the relationship endures, the closer the economic
union, the greater will be the presumptive claim to equal standards of
living upon its dissolution.[16]
Merger over time offers an effective way of capturing both the
compensatory and non-compensatory spousal support objectives that have
been recognized by our law since Moge and Bracklow. Under
our current law, both kinds of support claims have come to be analyzed in
terms of loss of the marital standard of living. Budgets, and more
specifically budgetary deficits, now play a central role in quantifying
this drop in standard of living. Under our proposed formula, the spousal
income difference serves as a convenient and efficient proxy measure for
loss of the marital standard of living, replacing the uncertainty and
imprecision of budgets. The length of marriage then determines the extent
of the claim to be protected against this loss of the marital standard of
living.
Merger over time clearly has a significant compensatory component. One
of the common ways in which spouses merge their economic lives is by
dividing marital roles to accommodate the responsibilities of
child-rearing. Compensatory claims directed at redressing economic
disadvantage due to the assumption of primary responsibility for child
care will loom large in one significant segment of marriages covered by
the without child support formula—long marriages in which there
were children of the marriage who are now independent. We in fact began
our project of constructing advisory guidelines around these cases, in
which current law recognizes strong compensatory claims and endorses
generous spousal support awards. Our formula likewise generates generous
spousal support awards in these cases, offering the possibility of awards
of up to 40 percent of the spousal income difference after
20 years of marriage and rising to 50 percent after
25 years.
Compensatory claims, in theory, focus on the lower income spouse’s loss
of earning capacity, career development, pension benefits etc. as a result
of having assumed primary responsibility for child care. However in
practice, after Moge, courts began to respond to the difficulties
of quantifying such losses with any accuracy, particularly in longer
marriages, by developing proxy measures of economic loss that focus on the
marital standard of living. Such a measure also takes into account the
economic advantages of the marriage in the form of earning capacity
maintained and developed during the course of the marriage. In doing so,
courts were supported by Justice L’HeureuxDubé’s comments in Moge,
reproduced above, on the continued relevance of marital standard of living
under the compensatory model of spousal support.
When awarding spousal support in cases involving long traditional
marriages, courts began to articulate their goal as providing the lower
income spouse with a reasonable standard of living as assessed against the
marital standard of living. And increasingly the standard for determining
spousal support in long marriages has become a rough equivalency of
standards of living. This development in our law, which quantifies
compensatory support in long marriages against the marital standard of
living, has paved the way for an income-sharing formula such as ours.
While incorporating compensatory claims, merger over time also has a
significant non-compensatory component. In cases of long traditional
marriages where the children are grown, it is now common to see spousal
support justified on a dual basis. Non-compensatory support claims based
on dependency over a long period of time are commonly relied upon to
supplement compensatory claims based on earning-capacity loss. In
marriages where the spouses have never had children—the other segment of
marriages covered by the without child support formula—spousal
support claims are often non-compensatory in nature, based on need,
dependency, and loss of the marital standard of living. Merger over time
addresses these non-compensatory claims.
Giving precise content to the concept of non-compensatory or
needs-based support has, of course, been one of the main challenges in
spousal support law since Bracklow. One reading of Bracklow
suggests that non-compensatory support is grounded in the economic
dependency and, to use Justice McLachlin’s words, the “interdependency” of
spouses. It recognizes the difficulties of disentangling lives that have
been intertwined in complex ways over lengthy periods of time. On this
broad reading of Bracklow, which many courts have accepted, need is
not confined to situations of absolute economic necessity, but is a
relative concept related to the previous marital standard of living. On
this view entitlement to non-compensatory support arises whenever a lower
income spouse experiences a significant drop in standard of living after
marriage breakdown as a result of loss of access to the other spouse’s
income, with amount and duration resolved by an individual judge’s sense
of fairness.
Merger over time incorporates this broad view of non-compensatory
support and provides some structure for quantifying awards made on this
basis. Merger over time recognizes the complex merger of economic and
non-economic lives that marriage involves and the countless ways that
spouses mould their skills and behaviour around those of the other spouse.
It takes account not just of obvious economic losses occasioned by the
marriage, but also of the elements of reliance and expectation that
develop in spousal relationships and increase with the length of the
relationship. Our proposed formula, based on merger over time, thus
addresses non-compensatory claims based on a drop in standard of living
after marriage breakdown (or more accurately, on a disproportionate loss
of the marital standard of living as compared to the other spouse). With
increasing length of marriage, our formula offers increasing amounts of
support for increasing periods of time to cushion the lower income
spouse’s drop in standard of living.
Our formula generates the same ranges for long marriages in which the
couple have never had children as for long marriages in which there have
been children who are now grown. This result, which flows from the merger
over time principle, mirrors what we find in the current law—lengthy
marriages involving economic dependency give rise to significant spousal
support obligations without regard to the source of the dependency.
Marriages in which there have never been children can, of course, give
rise to compensatory claims as well as non-compensatory claims. One of the
spouses may have experienced a significant economic loss as a result of
the marriage, by moving, for example, or by giving up employment. Or one
spouse may have conferred an economic benefit on the other by, for
example, funding his or her pursuit of a professional degree or other
education and training. If the marriage has been relatively lengthy, our
formula will generate awards generous enough to provide adequate
compensation for any significant economic loss or disadvantage or for
benefits conferred. However in the case of shorter marriages, the formula
will produce only modest awards reflecting a limited (non-compensatory)
claim to the loss of the marital standard of living that may not satisfy
compensatory claims. As will be discussed below, we have dealt with this
problem by recognizing an exception for disproportionate
compensatory claims that exceed the formula amounts in shorter
marriages.
A final point needs to be made with respect to this formula’s
relationship with existing theories of spousal support under the
Divorce Act. Building as it does on the concept of merger over
time, our without child support formula does not directly
incorporate the basic social obligation theory of non-compensatory support
that some read Bracklow as supporting.[17] This somewhat questionable theory, which is
discussed in more detail in the Background Paper, understands need in the
absolute sense of an inability to meet basic needs and grounds the
obligation to meet that need in the status of marriage itself. Our
proposed formula produces awards that will go some way toward meeting
basic needs where they exist, but limits the extent of any basic social
obligation by the length of the marriage. However, the exceptions
recognized under the formula, discussed below, do provide some
accommodation for elements of basic social obligation.
Here we provide more detail on many of the specific issues that arise
in the application of the without child support formula.
5.3.1 Entitlement a prior
issue
These advisory guidelines, which generate ranges for amount and
duration, are only applicable after entitlement has been established.
The mere existence of an income difference that would generate an
amount under this formula does not automatically result in an entitlement
to spousal support. Post-Bracklow, the basis for entitlement is
very broad. A significant income disparity between the spouses (and hence
a significant drop in the lower income spouse’s standard of living)
generally results in a finding of entitlement to some support, even
if it is only of a limited and transitional nature. And in cases where
there have been children, a significant spousal income disparity also
reflects, at least in part, the impact of past child-rearing
responsibilities on income-earning capacity. But it is always open to a
judge to find no entitlement on a particular set of facts in light of the
Divorce Act support objectives.
In Example 5.1 we have assumed that entitlement exists on
both compensatory and non-compensatory grounds. Ellen might be described
as self-sufficient because of her full-time employment at an income
$30,000. However, in our view, given the significant income disparity
between the parties ($60,000), the length of the marriage (20 years),
and the strong factual basis for a compensatory claim of earning capacity
loss because of child-care responsibilities for the now-grown child, such
an argument would be unlikely to succeed. If the facts were changed
dramatically, so that the income disparity were much smaller and there had
been no children, the finding on entitlement might be different.
5.3.2 No minimum income difference
fixed
While some guidelines do establish a minimum income difference before
income sharing kicks in (for example, the ALI guidelines require a
25 percent income disparity), our proposed formula does not. We view
such a requirement as an issue relating to entitlement and, as emphasized
above, these advisory guidelines do not deal with entitlement. The issue
of when an income difference becomes insignificant in terms of entitlement
to spousal support has been left to discretionary determinations under
current law.
Requirements of a minimum income disparity to trigger income sharing
also create problems of cliff effects such that an extra dollar in income
difference can mean the difference, for example, between no income sharing
and, depending on the length of the marriage, sharing a potentially large
percentage of the spousal income difference. In not dealing with
entitlement, these advisory guidelines avoid that problem.
5.3.3 Determining income under the
without child support formula
The calculation of each spouse’s gross income is a crucial step under
the without child support formula. As under the child support
guidelines the accurate determination of income will become a much more
significant issue in spousal support cases than it has in the past.
Income-sharing systems work directly off income; it is no longer possible
to make loose adjustments to amount. As a result, there will be incentives
to dispute income as it establishes the amount of spousal support to be
paid. 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 child support guidelines.
The starting point for the determination of income under this formula
is the definition of income under the Federal Child Support
Guidelines, including the Schedule III adjustments. Just as under
the child support guidelines, many complex issues will arise in
determining income where a spouse is self-employed or has other forms of
non-employment income. As well, it may be necessary to impute
income in situations where a spouse’s actual income does not
appropriately reflect his or her earning capacity.
As under the Federal Child Support Guidelines, income may be
imputed to the payor spouse. However, support amounts under these advisory
guidelines are based on both spouses’ incomes and the issue of imputing
income to the recipient spouse may also arise. However, this is unlikely
to be an issue on initial applications; it will more likely arise in
subsequent reviews or variations if it is established that the recipient
spouse has failed to make appropriate efforts towards self-sufficiency.
The application of the guidelines to reviews and variations will be
discussed in Chapter 10.
Imputing income is the appropriate tool under the advisory guidelines
to deal with concerns about the disincentives to self-sufficiency created
by generous amounts of spousal support, especially at higher income
levels. In current practice, these self-sufficiency concerns often result
in loose downward adjustments of the amount of support in initial
orders. Under these advisory guidelines, the range for amount is
determined by spousal incomes and such loose adjustments (except within
the range) are not possible. If a spouse is failing to make reasonable
efforts to realize his or her earning capacity income can be imputed on
a subsequent review or variation.
5.3.4 Determining the length of the
marriage
The formulas for both amount and duration rely upon length of marriage.
While we use the convenient term “length of marriage”, the actual measure
under the advisory guidelines is the period of cohabitation. This
includes pre-marital cohabitation and ends with separation. Inclusion of
pre-marital cohabitation in determining length of marriage is consistent
with what most judges do now in determining spousal support. This way of
defining length of marriage also makes the advisory guidelines more easily
used under provincial spousal support laws, which apply to non-marital
relationships, both opposite-sex and same-sex.
We have not set precise rules for determining the length of marriage.
The simplest approach would be to round up or down to the nearest full
year, and this is what we have done in our examples. Another, slightly
more complicated, approach would be to allow for half years and round up
or down to that. Because the formula generates a range and not a fixed
number, absolute precision in the calculation of the length of the
marriage is not required. Addition or subtraction of half a year will
likely make little or no difference to the outcome.
5.3.5 Primary application to initial
orders
The primary role of the formulas under these advisory guidelines is to
establish ranges for initial determinations of spousal support
based on the spouses’ incomes (or imputed incomes) at that point in time.
As under the current law, orders made under the advisory guidelines
will be open to variation in the future based upon a material change in
circumstances and may also include provisions for review.[18] The extent to which the advisory guidelines will
apply on variations and reviews is discussed in Chapter 10.
The possibility of variation and review should be kept in mind when
assessing the appropriateness of the outcomes generated by the formula. It
should not be assumed that the amounts generated by the formula will
remain the same over the entire duration of the support order. The amount
might, for example, be varied downward at some point in the future if the
recipient’s income has increased or if income is imputed to the recipient.
The same is true of duration. An initial order for indefinite support
under the advisory guidelines, as found in Example 5.1, does
not necessarily mean a permanent order. The amount Ellen receives under
the formula might be varied downward over time and the order might even be
terminated if her circumstances change dramatically such that her
entitlement disappears. In the cases where the formula generates time
limits, as under the current law, changed circumstances might result in
the amount being reduced, and in some cases support might be reduced to
zero or terminated before the time limit has expired. As marriages
increase in length, so too do the time limits under the formula, creating
more possibilities for variation and even termination before the expiry of
the time period. Current law also allows time-limited orders to be varied
by extending the payment of spousal support beyond the time limit, subject
to the requirement in s. 17(10) of the Divorce Act that if the
application is brought after the time limit has expired, the changed
circumstances upon which the variation is based must be related to the
marriage.
5.3.6 The Formula as a Starting
Point
The formula’s outcomes—the ranges it generates for amount and
duration—are intended as a useful starting point for determinations of
spousal support. In what follows we explore what this means—how to use the
ranges, how to restructure the formula outcomes by trading off amount
against duration, and when it will be appropriate to depart from the
formula outcomes by recognizing an exception.
Before proceeding to these issues, however, we set out some further
examples of the formula’s application to provide a more concrete
foundation for the subsequent discussion.
5.4.1 A short-marriage
example
We define short marriages as less than five years in length. In cases
of short marriages, the without child support formula generates
very small amounts for a very short duration. The rule of 65, which allows
for indefinite support to older spouses in marriages of less than
20 years in length, does not apply to short marriages. Support will
thus always be time-limited in these cases of short marriages.
Restructuring, discussed in more detail below, may be used to convert to a
lump sum if there are available resources. These formula outcomes conform
to current law which, barring exceptional circumstances, understands short
marriages to generate very limited support obligations. These formula
outcomes conform to current law which, barring exceptional circumstances,
understands short marriages to generate very limited support obligations,
if entitlement is found to exist at all.
Example 5.2
Karl and Beth were married for only four years. They had no children.
Beth was 25 when they met and Karl was 30. When they married, Beth was a
struggling artist who earned a meagre gross income of $12,000 a year
giving art lessons to children. Karl is a music teacher with a gross
annual income of $60,000. With Karl’s encouragement, Beth stopped
working during the marriage to devote herself to her painting.
Entitlement is a threshold issue before the advisory guidelines
apply. On these facts, given the disparity in income and Beth’s
unemployment at the point of marriage breakdown, entitlement is likely
to be found.
The conditions for indefinite support do not apply and duration would
be calculated on the basis of .5 to 1 year of support for each year of
marriage.
To determine the amount of support under the formula:
- Determine the gross income difference between the parties:
$60,000 – 0 = $60,000
- Determine the applicable percentage by multiplying the
length of the marriage by 1.5-2:
1.5 X 4 years = 6 percent
to
2 X 4 years = 8
percent
- Apply the applicable percentage to the income difference:
6 percent X $60,000 = $3,600/year ($300/month)
to
8
percent X $60,000 = $4,800/year
($400/month)
Duration of spousal support = (.5-1) X 4 years of marriage = 2
to 4 years
The result under the without child support formula is
support in the range of $300 to $400 per month for a duration of 2 to 4
years.
Using restructuring, discussed in more detail below, this modest
award could be converted into a lump sum or into a periodic award that
would be paid out over a very short time period such as one year.
5.4.2 Some medium-length marriage
examples
In medium-length marriages (5 to 19 years), the formula generates
increasing amounts of support as the marriage increases in length, moving
from relatively small percentages at the shorter end of the spectrum to
relatively generous amounts after 15 years, when awards of
30 percent of the gross income difference become possible. Except
where the rule of 65 is applicable, the formula generates time limits of
varying lengths depending on the length of the marriage. The ranges for
duration are, however, very wide, leaving much opportunity to respond to
the facts of particular cases.
This category covers a diverse array of cases raising a variety of
support objectives. Current law is at its most inconsistent in its
handling of these cases. This area posed the greatest challenges to
developing a single formula that would yield appropriate results. We
concluded that our formula based on merger over time provided the best
starting point. But not surprisingly, it is in these cases that there will
be the most frequent need to rely upon restructuring to massage the
formula outcomes and where there will likely be the greatest resort to
exceptions.
Example 5.3
Bob and Susan have been married 10 years. They married in their late
twenties and Sue is now 38. Bob is employed as a computer salesman and
Sue is a hairdresser. Both worked throughout the marriage. There were no
children. Bob’s gross annual income is $65,000; Sue’s is $25,000.
Entitlement is a threshold issue before the advisory guidelines are
applicable. An argument might be made that there is no entitlement to
support: Sue is employed full time and could support herself, and there
is no compensatory basis for support. However, Sue will suffer a
significant drop in standard of living as result of the marriage
breakdown and, at an income of $25,000, will likely experience some
economic hardship. Current law would suggest an entitlement to at least
transitional support on a non-compensatory basis to allow Sue to adjust
to a lower standard of living.
The case does not satisfy the conditions for indefinite support. The
marriage is under 20 years and the case does not fall within the
rule of 65 for indefinite support because Sue’s age at separation plus
years of marriage is below 65 (38+10=48).
To determine the amount of support under the formula:
- Determine the gross income difference between the parties:
$65,000 – $25,000 = $40,000
- Determine the applicable percentage by multiplying the
length of the marriage by 1.5-2:
1.5 X 10 years = 15 percent
to
2 X 10 years = 20
percent
- Apply the applicable percentage to the income difference:
15 percent X $40,000 = $6,000/year
($500/month)
to
20 percent X $40,000 = $8,000/year
($667/month)
Duration of spousal support = (.5-1) X 10 years of marriage =
5 to 10 years
The result under the formula is support in the range of $500 to
$667 per month for a duration of 5 to 10 years.
Consistent with current law, the formula essentially generates modest
top-up support for a transitional period to assist Sue in adjusting from
the marital standard of living.
An award of $500 per month, at the low end of the range, would leave
Sue with a gross annual income of $31,000 and Bob with one of $59,000. An
award of $667 per month, at the high end of the range, would leave Sue
with a gross annual income of $33,000 and Bob with one of $57,000. In a
marriage of this length the formula does not equalize incomes.
Some might find the amounts generated by the formula too low, even at
the high end of the range. An argument could be made that, consistent with
current law, any transitional order should put Sue somewhat closer to the
marital standard of living for the period of gearing down. As will be
discussed in more detail below, such a restructuring of the formula
outcome is possible to produce larger amounts for a shorter duration.
If the facts were changed so that the marriage were shorter—seven years
in length—the percentage range of the gross income difference to be shared
would fall to 10.5 to 14 percent and the duration would be shorter.
The result under the formula would be spousal support in the range of $350
to $467 per month ($4,200 to $5,600 per year), for 3.5 to 7 years.
Example 5.4
David and Jennifer were married for 12 years. It was a second
marriage for both. David was 50 when they met. He is a businessman whose
gross annual income is now $100,000 per year. Now 62, he is in good
health, loves his work, and has no immediate plans to retire. Jennifer
was 45 when they met, while Jennifer was working in his office. She had
been a homemaker for 20 years during her first marriage and had received
time-limited support. When they met she was working in a low-level
clerical position earning $20,000 gross per year. Jennifer, now 57, did
not work outside the home during the marriage.
Entitlement is a threshold issue before the advisory guidelines are
applicable. Given the length of the marriage and Jennifer’s lack of
income, entitlement to support on non-compensatory grounds would be
relatively uncontentious.
To determine the amount of support:
- Determine the gross income difference between the parties:
$100,000 – 0 = $100,000
- Determine the applicable percentage by multiplying the
length of the marriage by 1.5-2:
1.5 X 12 years = 18 percent
to
2 X 12 years = 24
percent
- Apply the applicable percentage to the income difference:
18 percent X $100,000 = $18,000/year
($1,500/month)
to
24 percent X $100,000 = $24,000/year
($2,000/month)
This is a case where the rule of 65 would govern duration. Because
Jennifer’s age at separation plus years of marriage is 65 or over
(57+12= 69), the formula provides for indefinite support, rather than
the durational range of 6 to 12 years based on length of marriage alone.
A variation in amount would, however, be likely when David retires.
The result under the formula is support in the range of $1,500 to
$2,000 a month for an indefinite duration, subject to variation and
possibly review.
Support at the low end of the range would leave Jennifer with a gross
annual income of $18,000 and David with one of $72,000. Support at the
high end of the range would leave Jennifer with a gross annual income of
$24,000 and David with one of $66,000. Again, because of the length of the
marriage (12 years), the formula does not generate results that approach
income equalization.
Given that David’s source of income is a business, in reality this fact
situation would raise many complex issues of determining his income. It is
unlikely that any income would be imputed to Jennifer for the purposes of
making an initial order of support given her age and the length of time
she has been out of the workforce. Income might be imputed on a subsequent
variation or review if the evidence established that Jennifer was capable
of earning income and was not appropriately contributing to her own
support. If Jennifer were to earn income in the future, support would be
adjusted under the advisory guidelines on a variation application as
discussed in Chapter 10.
Now, let’s assume that the marriage was shorter and only lasted seven
years. As in the original facts, Jennifer is 57 at the point of separation
and David is 62. For a 7 year marriage the percentage range of the gross
income difference to be shared would fall to 10.5 to 14 percent. The
rule of 65 would no longer apply to determine duration. Spousal support
under the formula would thus be in the range of $875 to $1,167 per month
(or $10,500 to $14,000 per year), for a duration of 3.5 to 7 years.
Restructuring might be used in this case to extend the maximum duration by
one year to take Jennifer to 65, when pension benefits will become
available.
5.4.3 Some long-marriage
examples
In cases of long marriages (20 years or longer) the formula generates
generous levels of spousal support for indefinite periods, reflecting the
fairly full merger of the spouses’ lives. The long marriages covered by
the without child support formula fall into two categories: those
where there have been children who are no longer dependent and those where
the couple did not have children.
Current case law yields a fairly consistent pattern of generous,
indefinite support in cases of long traditional and quasi-traditional
marriages with children, intended to provide roughly equivalent standards
of living. Admittedly, however, the standard of what is considered
generous varies across the country. It is more difficult to find consensus
on appropriate outcomes in cases of long marriages where there have not
been children or where both spouses have been fully employed, with or
without children. The ranges under our proposed formula were developed
with the recognition that they would have to cover cases of long marriages
of both categories, where there was significant income disparity but no
strong compensatory claim.
Example 5.1 provides an example of the formula’s
application to a long marriage with children where the wife was a
secondary earner. Example 5.5, presented below, involves the
familiar scenario of a very long traditional marriage.
Example 5.5
John and Mary were married for 28 years. Theirs was a traditional
marriage in which John worked his way up the career ladder and now earns
$100,000 gross per year, while Mary stayed home and raised their two
children, both of whom are now grown up and on their own. Mary is 50
years of age and has no income. John is 55.
Entitlement to spousal support is clear on these facts and thus the
advisory guidelines are applicable. Because the length of the marriage
is over 25 years, the maximum range for amount applies—37.5 to 50
percent of the gross income difference.
To determine the amount of support under the formula:
- Determine the gross income difference between the parties:
$100,000 – 0 = $100,000
- The maximum range for amount is 37.5 to 50 percent of the gross
income difference
- Apply the applicable percentage to the income difference:
37.5 percent X $100,000 = $37,500/year ($3,125/month)
to
50 percent X $100,000 = $50,000/year
($4,167/month)
Duration is indefinite because the marriage is 20 years or
over in length.
The formula results in a range for support of $3,125 to $4,167 per
month for an indefinite duration, subject to variation and possibly
review.
An award of $3,125 per month, at the low end of the range, would leave
Mary with a gross income of $37,500 per year and John with one of $62,500.
An award of $4,167 per month, at the high end of the range, would leave
both parties with a gross annual income of $50,000. In this case an award
at the highest end of the range would not be appropriate given the need to
recognize John’s costs of earning an income. An award of 50 percent
of the gross income difference would actually leave Mary with a higher net
income than John.
It would be inappropriate to impute income to Mary in an initial
order given her long absence from the work, especially if the order is
being made near the time of separation. However, at some point in the
future, on a variation or review, income may be imputed to Mary, and
spousal support re-determined, if evidence establishes that she is not
making reasonable efforts to contribute to her own support. As will be
discussed further in Chapter 10,
the order would also be open to variation over time in response to many
other changes in the parties’ circumstances, the most likely being John’s
retirement.
Example 5.6 involves a long marriage without children.
Example 5.6
Richard is a teacher with a gross annual income of $75,000. He is in
his late forties. His wife, Judy, is the same age. She trained as a
music teacher but has worked as a freelance violinist for most of the
marriage, with a present gross income of $15,000 a year. Judy has also
been responsible for organizing their active social life and extensive
vacations. They were married 20 years. They had no children.
Entitlement will easily be established in this case given the
significant income disparity, Judy’s limited employment income, and the
length of the marriage.
To determine the amount of support under the formula:
- Determine the gross income difference between the parties:
$75,000 – $15,000 = $60,000
- Determine the applicable percentage by multiplying the
length of the marriage by 1.5-2:
1.5 X 20 years = 30 percent
to
2 X 20 years = 40
percent
- Apply the applicable percentage to the income difference:
30 percent X $60,000 = $18,000/year
($1,500/month)
to
40 percent X $60,000 = $24,000/year
($2,000/month)
Duration would be indefinite because the marriage was 20 years
in length.
The result under the formula is support in the range from of
$1,500 to $2,000 per month for an indefinite duration, subject to
variation and possibly review.
An award at the lower end of the range would leave Judy with a gross
annual income of $33,000 and Richard with one of $57,000. An award at the
high end of the range would leave Judy with a gross annual income of
$39,000 and Richard with one of $51,000.
Judy will certainly be expected to increase her income and contribute
to her own support. The issue in applying the formula will be whether a
gross income of $30,000 a year, for example, should be attributed to Judy
for the purposes of an initial determination of support. If so, support
under the formula would be lowered to a range of $1,125 to $1,500 per
month (or $13,500 to $18,000 per year).
More likely, Judy would be given some period of time (for example one
or two years) before she would be expected to earn at that level, with
support to be adjusted at that point, after a review.
The without child support formula generates ranges for
amount and for duration as well unless the conditions for indefinite
support are met. The ranges allow the parties and their counsel, or a
court, to adjust amount and duration to accommodate the specifics of the
individual case in light of the support factors and objectives found in
the Divorce Act.
In this section we can only highlight in the most general way the sorts
of factors that could be taken into account in fixing precise amounts and
time periods and that might push a determination up or down within the
ranges. Most of the relevant factors will be the same as those that now
operate within the present discretionary case law, the difference being
that here they will operate within the boundaries created by the formula.
Also, as under current law, no single factor will be determinative and
several factors may be at play in any given case, sometimes pushing in
different directions.
First, a strong compensatory claim may be a factor that favours
a support award at the higher end of the ranges both for amount and
duration. A spouse who has suffered significant economic disadvantage as a
result of the marital roles and whose claims are based on both
compensatory and non-compensatory grounds may have a stronger support
claim than a spouse whose economic circumstances are not the result of
marital roles and who can only claim non-compensatory support based upon
loss of the marital standard of living. In Examples 5.1 and
5.5, both of which involved long marriages where one spouse
sacrificed employment opportunities as a result of child care
responsibilities, this factor of a strong compensatory claim could weigh
in favour of an award at the higher end of the range in as compared to
some of our other examples where there were no children.
Second, in a case where the recipient has limited income and/or earning
capacity,because of age or other circumstances,the recipient’s
needs may push an award to the higher end of the ranges for amount and
duration. Conversely, the absence of compelling need may be a factor that
pushes an award to the lower end of the range. In Example 5.4,
where Jennifer is unemployed at the age of 57, this need factor might
weigh in favour of an award at the higher end of the range.
Example 5.2, in contrast, where Sue is only 38 and earning
$25,000 per year, the need factor may not be as compelling, suggesting an
award at the lower end of the range. In Example 5.1 the
absence of compelling need on Ellen’s part, given her income of $30,000
per year, might suggest an award at the lower end of the range, but this
would be counter-balanced by Ellen’s strong compensatory claim.
Third, property division may affect where support is fixed
within the ranges for amount or duration. For example, an absence of
property to be divided might suggest an award at the higher end of the
range; an unequal division in favour of the recipient spouse may suggest
an award at the lower end of the range.
Fourth, need and limited ability to pay on the part of the payor
spouse may push an award to the lower ends of the ranges. These
factors will clearly have special importance at the lower end of the
income spectrum, even above the floor of $20,000. (The floor is discussed
further in Chapter 7.)
In some cases where the need of the recipient spouse is pressing, the
payor spouse may also be struggling to maintain some modest standard of
living. A situation where debts exceed assets and where the payor spouse
is carrying a disproportionate share of those debts, may also push an
award to the low end of the range. Often, however, it will be necessary to
go outside the formula to accommodate this situation, and a more extensive
treatment of debt as a factor is thus found in the discussion of
exceptions below. As has been previously noted, in long marriages where
the recipient spouse was not employed and stayed home full time, income
equalization (the highest end of the range) fails to recognize that the
payor spouse has costs of going out to paid work (over and above any
deductions), and an award somewhat lower in the range for amount would be
required.
Fifth, self-sufficiency incentives may push in different
directions. As often happens under the current case law, support might be
fixed at the lower end of the ranges to encourage the recipient to make
greater efforts to self-sufficiency, although imputing income also goes a
long way towards responding to this concern. On the other hand, the need
to promote self-sufficiency might lead to an award at the higher end of
the range where this could mean that a recipient spouse obtains
re-training or education leading to more remunerative employment and less
support in the long term.
This is not an exhaustive list, but rather an attempt to identify some
of the more obvious factors that might affect how and where amount and
duration are fixed within the ranges. The ranges also allow room for local
and regional differences in support outcomes, recognizing that awards in
some parts of the country (Ontario, and more specifically Toronto) are
higher than in others (for example, the Atlantic Provinces).
The without child support formula generates separate figures for
amount and duration. In Chapter 4
we introduced the concept of restructuring, which allows amount and
duration to be traded off against each other, as long as the overall value
of the restructured award remains within the global—or total—amount
generated by the formula when amount is multiplied by duration. A certain
degree of adjustment of amount against duration will occur when precise
amounts and duration are being fixed within the ranges. However, in
particular cases an appropriate award will require an adjustment beyond
the limits of the formula’s ranges. Restructuring allows the
formula to continue to act as a tool to guide such deviations from the
ranges because the overall value of the award remains within the global
amounts set by the formula. In this way restructuring differs from
exceptions, discussed below, which involve an actual departure from
the outcomes suggested by the formula.
As noted in Chapter 4,
restructuring can be used in at least three different ways:
- to front-end load awards by increasing the amount beyond the
formula’s range and shortening duration;
- to extend duration beyond the formula’s range by lowering the
monthly amount; and
- to formulate a lump sum payment by combining amount and
duration.
Restructuring will have its main application under these advisory
guidelines in cases governed by the without child support formula.
To trade off amount against duration requires a fixed duration for the
award. As a result, restructuring will generally only be possible in cases
where the formula generates time limits rather than indefinite support. It
will thus have limited application under the with child support
formula, discussed in Chapter 6,
where duration is often uncertain.
As we were developing the without child support formula we
discovered that many of the problem cases, where the outcomes generated by
the formula initially appeared to be out of line with current cases, were
resolved by restructuring. We similarly anticipate that in practice many
cases where the formula outcome initially appears inappropriate will be
resolved through the adjustment of amount and duration. Awards will thus
remain consistent with the overall or global amounts generated by the
formulas.
Restructuring will inevitably involve a certain amount of guesswork in
determining equivalencies between restructured awards and formula
outcomes. But this is already familiar to family law lawyers who
frequently make tradeoffs between amount and duration in settlement
negotiations and spousal support agreements. Restructuring by means of a
lump sum payment or an increase in amount above the formula amounts will
also require a finding of ability to pay on the payor’s part.
We now provide some examples of the different ways restructuring might
be used. We have used very simplified calculations that do not take
into account the time-value of money, the various future contingencies
that could affect the value of awards over time, or tax consequences. We
have assumed that the third use of restructuring—converting a periodic
order to a lump sum in a short marriage—is familiar and straightforward,
and so have not provided a specific example. Its use was suggested in
Example 5.2.
Our first example involves front-end loading to increase the amount
outside the formula’s range by reducing duration. This involves choosing a
durational limit at the low end of the formula’s range or below it.
Front-end loading may be appropriate in shorter marriages where the
monthly formula amounts are relatively modest. Restructuring would allow a
generous but relatively short transitional award. Under current practice,
spousal support awards in such cases would be shaped by the goal of
cutting the ties between the parties fairly quickly and allowing them to
go their separate ways. Front-end loading may also be desirable in cases
where the recipient spouse needs significant support for a short period to
undertake a program of retraining or education, to earn a higher
income.
Example 5.7
Here we return to the case of Bob and Susan in Example 5.3,
who were married 10 years and had no children. They are both in
their late thirties and employed full time. Bob’s gross annual income as
a computer salesman is $65,000; Sue’s as a hairdresser is $25,000.
Under the without child support formula a 10 year marriage
such as this gives rise to a range for amount of 15 to 20 percent of the
gross income difference. Under the formula, spousal support would be in
the range of $500 to $667 per month (or $6,000 to $8,000 per year)
for a period of 5 to 10 years.
Given the parties’ ages and employment situations and the length of the
marriage, the appropriate award in this case would likely be one that cut
the ties between the parties fairly quickly. The monthly amounts generated
by the formula might also appear low when assessed against current
practice. Both of these concerns could be met by providing transitional
support at a higher level than the formula allows, for example $1,300 per
month (which represents roughly 39 percent of the income difference)
for only 3 years, rather than the 5‑year minimum duration under the
formula.
Restructuring requires the calculation of the global or total amounts
generated by the formula when amount is multiplied by duration. Here the
minimum and maximum global awards under the formula are as follows:
- $500 per month for 5 years ($500 x 60 months) = $30,000
- $667 per month for 10 years ($667 x 120 months) = $80,040
The proposed award of $1,300 per month for three years, which has a
total value of $46,800 ($1,300 x 36 months), would be allowed under
restructuring as it falls within the global ranges generated by the
formula, even though it falls outside the formula’s specific ranges for
amount and duration.
Although this example uses a fixed monthly amount for the duration of
the restructured award, it would also be possible to restructure using
step-down awards, as long as the total amount of the award falls within
the range set by the formula. In the example above, restructuring would
allow an award of $1,500 per month for the first year, 1,000 per month for
the second year, and $750 per month for the third year. The total value of
the award—$39,000—falls within the global amounts generated by the
formula.
Our second example shows the use of restructuring to extend duration by
cutting back on amount. Depending on how much of an extension of duration
is required, this can be accomplished either by choosing an amount at the
lower end of the formula’s range for amount or by setting an amount
below the formula’s range. This use of restructuring might be
desirable in medium-length marriages where the recipient spouse will have
long-term need and would be better off with modest supplements to income
over a longer period of time than with more generous payments over the
time period suggested by the formula.
Example 5.8
Brian and Gail were married for 15 years and had no children. Both
are 45. Gail is a phys ed teacher earning $70,000 gross per year. Brian
worked as a trainer in the early years of the marriage but was forced to
stop working because of a debilitating illness. He now receives CPP
disability of $10,000 per year.
For a 15-year marriage, the formula generates an amount ranging from
22.5 to 30 percent of the gross income difference. Here the formula
results in the range for spousal support of $1,125 to $1,500 per month
(or $13,500 to $18,000 per year), for a duration of from 7.5 to 15
years.
An award of 15 years’ duration would take Brian to the age of 60. The
desirable result in this case might be to provide support until Brian
reaches age 65 when he will start to receive pension benefits.
Restructuring would permit this.
The global amounts generated by the formula range from $101,250 to
$270,000, calculated as follows:
- $1,125 per month for 7.5 years ($1,125 X 90 months) = $101,250
- $1,500 per month for 15 years ($1,500 X 180 months) = $270,000
Because of Brian’s need and the length of the marriage, this would
likely be a case where the award would be at the upper end of the ranges
for both amount and duration.
Using restructuring, the award could be extended to 20 years to take
Brian to age 65 if the amount were set at the lowest end of the formula’s
range: $1,125 per month. In this case, the total amount of the award
($1,125 x 240 months) would equal the maximum global amount set by the
formula, $270,000.
Similarly if Brian and Gail were both five years younger and a 25 year
award would be required to take Brian to age 65, the amount could be
reduced to $900 per month (18 percent of the gross income difference)
as the total value of the award, calculated as follows, would again equal
the maximum global amount generated by the formula ($900 X 300 months =
$270,000).
Although this example extends duration for a defined period, it might
also be possible to use restructuring to extend duration indefinitely,
recognizing, however, that the total value of an indefinite award cannot
be calculated with precision. A certain amount of guesswork would
inevitably be involved in determining how low the amount of the indefinite
award should be set to achieve some rough equivalence with the formula
amounts.
Our formulas are intended to generate appropriate outcomes in the
majority of cases without dependent children. The formulas have been
designed to cover a wide range of typical cases. There will be
unusual or atypical cases, however, where the formulas generate results
inconsistent with the support factors and objectives found in the
Divorce Act and an appropriate result can only be achieved by
departing from the formula.
The term exceptions refers, under these advisory guidelines, to
recognized categories of departures from the ranges of amounts and
durations for spousal support under the formulas. Exceptions are the last
step in a support determination in cases covered by the without child
support formula. The without child support formula provides two
other opportunities, discussed above, to shape awards that are responsive
to the exigencies of individual cases. First, the ranges for amount and
duration provide considerable scope to adjust within those ranges to the
particular facts of any case. Second, restructuring provides a further
means to push and pull amount and duration above and below the ranges
generated by the formula. Only if neither of these steps can
accommodate the unusual facts of a specific case should it become
necessary to resort to these exceptions.
As we emphasize throughout this document, these advisory guidelines are
informal rules and are not legally binding. In principle, the formulas’
outcomes can be ignored whenever they are viewed as inappropriate.
Departures from the formulas’ outcomes could thus have been left entirely
to case-by-case determination, without any need for categorical
exceptions. In our view, however, it is important to the integrity of the
proposed advisory guidelines that exceptions be listed and defined. It is
only the systemic benefits of consistency, predictability, coherence and
fairness that encourage all concerned to work within the formulas’ ranges.
We took the view that exceptions should be stated, to structure and
constrain departures from the formula in the interests of consistency and
predictability.
We recognize that any list of itemized exceptions will not be
exhaustive. There will always be unusual and even one-of-a-kind fact
situations in spousal support cases, as in family law generally. We cannot
even create categories to encompass all cases. But there are certain
familiar categories of “hard” cases that come up with sufficient
regularity that an exception can both recognize their existence and offer
some guidance to their resolution. Following conventional legal
principles, a spouse who claims to fall within one of these exceptions
ought to bear the burden of proof.
Our listed exceptions, which we review below, will not be surprising.
More likely to attract comment will be the fact situations that we did
not put on the list. In the next stage of discussions, there will
undoubtedly be further discussion of these exceptions.
We focus here on the way that these exceptions will operate in cases
without dependent children. Their application in cases with
dependent children, under the with child support formula, will be
dealt with in Chapter 6.
5.7.1 The compensatory
exception
The merger over time concept, as explained above, incorporates both
compensatory and non-compensatory elements. In longer marriages the
without child support formula generates high percentage ranges for
sharing the gross income difference. In these longer marriages, by
recognizing strong non-compensatory claims to the marital standard of
living, the formula amounts will also fully recognize any compensatory
claims based on loss of earning capacity or career damage.
For short- or medium-length marriages, however, the without child
support formula produces smaller amounts of support, reflecting the
reduced importance of compensatory considerations, especially as most of
these will be marriages without children. More important in these
short-to-medium marriages will be the transitional function of
non-compensatory support, with the transition being longer or shorter
depending upon the expectation and reliance interests flowing from the
length of the marriage.
But some short- or medium-length marriages can involve large
compensatory claims, disproportionate to the length of the
marriage, even without any children involved. These compensatory claims
may relate to an economic loss or may involve a restitutionary claim for
an economic advantage conferred. Some examples come to mind:
- One spouse is transferred for employment purposes, on one or more
occasions, forcing the other spouse to give up his or her job and to
become a secondary earner.
- One spouse moves across the country to marry, giving up his or her
job or business to do so.
- One spouse works to put the other through a post-secondary or
professional program but the couple separates shortly after graduation
as in Caratun v. Caratun[19] before the supporting spouse has been able to
enjoy any of the benefits of the other spouse’s enhanced earning
capacity.
There could undoubtedly be other examples.
If a claimant spouse can prove such a disproportionate compensatory
claim, then this exception would allow for an individualized determination
of the amount of spousal support, based upon the size and nature of that
claim. The formula will not offer much assistance.
The compensatory principles set out in Moge, and reaffirmed in
Bracklow, continue to develop in the case law. Thus, the precise
scope of this exception would reflect the evolution of those principles.
5.7.2 Illness and
disability
Many cases of illness or disability can be accommodated within the
formula. The central concern in many of these cases will be the
recipient’s need for long-term or indefinite support. Indefinite support
would be available under the without child support formula after 20
years of marriage or based upon the rule of 65. And, in most
medium-to-long marriages, the ranges for duration and amount offer
considerable scope to accommodate the needs of an ill or disabled spouse.
In some medium-length marriages, where the formula generates time
limits, restructuring may have to be employed. Under restructuring, the
monthly amount could be reduced and the duration extended beyond the
maximum, especially where spousal support is effectively bridging until
retirement, when the recipient’s pension and old age benefits become
payable. For this to be effective, the support amounts generated by the
gross income difference would have to be large enough to allow for a
reasonable lower amount of monthly support. Example 5.8, the
case of Gail and Brian, where Brian is suffering from a chronic illness at
the end of their 15-year marriage, illustrates the use of restructuring to
deal with the needs of an ill or disabled spouse.
There will be some cases where none of these possibilities within the
formula can adequately accommodate a recipient spouse’s illness or
disability and a departure from the formula may be necessary. Typically
these will be cases where the recipient is younger or the marriage is
shorter or the payor’s income is not high. Under this exception, we
suggest that it would be possible to lengthen the maximum durational
limit, while keeping the amount within the range, more specifically at or
near the lower end of the range. That would be our preferred solution
to exceptional illness and disability cases, as any support amounts would
still remain within the formula ranges.
To use an example, we can change the facts slightly in
Example 5.3, the case of Bob and Sue.
Example 5.9
Bob and Sue were married for 10 years. Sue is now 38, and Bob earns
$65,000 per year. There were no children. Assume that Sue worked as a
hairdresser, earning $25,000 a year, but then became ill and unable to
work towards the end of the marriage, with no prospect of future
improvement. She now receives $10,000 per year thanks to CPP disability.
Under the without child support formula, the applicable
percentages for amount after a 10 year marriage would still be, as on
the original facts, 15 to 20 percent, but now applied to a gross
income difference of $55,000. Spousal support under the formula would be
in the range of $687 to $917 per month (or $8,250 to $11,000 annually)
for a duration ranging from 5 to 10 years.
At the maximum duration, Sue would only obtain spousal support until
age 48. Suppose Sue wants to receive support until age 60, another 12
years or 22 years in total.
Restructuring could be attempted. The maximum global amount under the
formula would be $110,000 ($917 per month for 10 years).If this global
amount were stretched over 22 years (and ignoring any discounting for
time), that could generate an annual amount of $5,000 per year or
$417 per month.
Since Sue would likely need more than $5,000 per year, she would argue
that she falls within this illness and disability exception. If Sue’s
claim for support beyond what the formula provides is accepted as
compelling, our preferred solution would be to extend the
duration of support to age 60 as Sue requests, but for an amount at the
low end of the range, i.e. $687 monthly or $8,250 per year.
However, this case would not necessarily fall within the illness and
disability exception. Under current law Sue’s claim for indefinite
support may not be accepted and the formula outcome, subject to
restructuring, may be appropriate. In Bracklow, for example, which
involved a support claim by a disabled spouse on facts quite similar to
those in this example, the final result in the case is consistent with our
formula, without resort to an exception.[20]
Bracklow involved a seven-year relationship. At the time of the
original trial, Mr. Bracklow was earning $44,000 gross per year and Mrs.
Bracklow’s income from CPP was $787 per month, or roughly $9,500 per year.
The final result in the case, taking into account the interim support
paid, was a time-limited order of $400 per month for slightly more than
seven years. Our formula yields a similar result. Under the formula, after
a 7 year marriage the range for support is 10.5 to 14 percent of the
gross income difference, which in Bracklow was $34,500. The range
for support would therefore be $301 to $402 per month (or $3623 to $4830
per year) for a duration of 3.5 to 7 years duration. Thus the results
generated by our formula might also be seen as appropriate for the case of
Bob and Sue.
What we propose here is a limited exception for illness and disability
cases, as these are the cases that the courts often treat as exceptional.
Some might propose that there be a similar and additional exception based
upon age for older recipient spouses. In our view, there are sufficient
accommodations for age in the without child support formula. The
recipient’s age will be a factor in fixing amount and duration within the
ranges and there is also the rule of 65 for indefinite support. Some would
even broaden this exception beyond illness and disability, into something
more like a basic social obligation exception, where the recipient has
basic needs beyond any formula support for one of any number of reasons.
We believe that the sheer breadth of a basic social obligation exception
would undermine the integrity and consistency of any formula or advisory
guidelines.
5.7.3 Debt payment
The existence of marital debts does not necessarily affect spousal
support. In many cases debts are adequately taken into account in property
division, reducing the amount of shareable property. However, where a
couple has a negative net worth (i.e., debts greater than assets) then the
allocation of the debt payments can have a dramatic impact upon ability to
pay. If the payor is required to pay a disproportionate share of the
debts, then there may have to be some reduction in support from the
amounts generated by the formula. The reduction may only be for a
specified period, depending upon the balance remaining to be paid. At the
end of that period, support could automatically revert to an amount within
the range or, in some cases, a review may be ordered at that time. Where
assets exceed debts, however, there can be little reason for a debt
exception, as the party responsible for the debt will usually also hold
the corresponding asset or other assets.
We also considered, but rejected, broader or additional exceptions
based on property division. Some have suggested that a high property award
should be grounds for an exception, whether the property award was high
because a large total pool of property was divided or because an unequal
division of property was effected in favour of the recipient. On this
view, property and support are alternative financial remedies that can be
substituted, one for the other, so that a high property award can justify
lower spousal support, especially in negotiated settlements. While this
view does find some acceptance in the case law, so too does the more
compelling view that property and support are governed by distinctive laws
and serve different purposes and that a high property award should not in
and of itself dictate a significant reduction of spousal support.
Furthermore, property division is a matter of provincial and territorial
law whereas we are dealing with spousal support under the federal
Divorce Act. Recognizing high property awards as an explicit
exception would, in our view, inappropriately entrench a contested view.
The advisory guidelines can already accommodate some of these property
concerns. First, each spouse is expected to generate reasonable income
from his or her assets and income can be imputed where a spouse fails to
do so. The income imputed will affect the operation of the formula.
Second, as discussed above, property-related concerns may, in some cases,
determine whether support is fixed at the upper or lower ends of the
ranges for amount or duration, e.g. an absence of property to be divided
or an unequal division in favour of one spouse or continuing equalization
payments. Third, many high property cases are also high-income cases,
bringing into play the ceiling (discussed in Chapter 7)
above which the formula will not necessarily apply.
One last property point: these advisory guidelines on amount and
duration do not change the law from Boston v. Boston[21] governing double-dipping, mostly from pensions.
That law remains in place, as a possible constraint upon the amount of
support, determining if some portion of income should be excluded from the
formula because it has been previously shared under property division.
5.7.4 Prior support
obligations
An obligation to pay support for a prior spouse or prior children will
affect the support to be paid to a subsequent spouse. Generally speaking,
the courts have adopted a first-family-first approach for payors in such
cases, subject to a very limited exception for low-income payors. Under
the current law, courts determine the amount of any support for the second
spouse taking into account the prior support obligations and the payor’s
budget.
A move to an income-sharing method of determining spousal support under
a formula will require an explicit exception for prior support
obligations. The exception could apply to either the payor spouse or the
recipient spouse, although the issue comes up most frequently for payors.
Most often, the prior support obligation will involve child support but
spousal support may also be involved after a longer first marriage and
then a shorter second marriage.
Where there are prior support obligations, a spouse’s gross income will
have to be adjusted to reflect those obligations, before computing
the gross income difference and applying the percentage ranges to that
difference. Adjusting for a prior spousal support obligation is
simple, as spousal support is paid on a gross or before-tax basis: deduct
the amount of spousal support paid from the spouse’s gross income to
establish the spouse’s gross income. For a child support
obligation, the calculation is slightly more complicated, as child
support is now paid on a net or after-tax basis: first, gross up the child
support amount to reflect the payor’s marginal tax rate on the amount paid
and then deduct the grossed up amount from the spouse’s gross income.
The effect of this prior support deduction is to leave the affected
spouse with a lower gross income. In the typical case of the payor spouse,
the payor would thus have a lower income, the size of the gross income
difference would be reduced and hence the formula amount of support for
the second spouse would be lower.
5.7.5 Interim support
Where there are compelling financial circumstances at the interim
stage, an exception can be made, as is explained in more detail in Chapter 8
below.
