Spousal Support Advisory Guidelines July 2008
A central topic of every conference and meeting about the Advisory Guidelines has been self-sufficiency. It is not surprising that any attempt to bring greater consistency and predictability to spousal support awards should bring this topic to the forefront. Some have criticized the Advisory Guidelines for generating "entitlements" to support, "entitlements" seen as too generous in amount and duration, eliminating any incentives for recipients to pursue self-sufficiency. Others have criticized the Advisory Guidelines for not producing "answers" or "rules" on the hard issues of self-sufficiency.
The language of the fourth objective in section 15.2(6)(d) of the Divorce Act has been parsed and argued in case after case:
"in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time." We
were frequently asked,
"How do the Spousal Support Advisory Guidelines promote self-sufficiency?"
To understand what the Advisory Guidelines can and can’t do under the rubric of self-sufficiency, it is important to start with the legal framework within which the Guidelines operate.
After Pelech in 1987 and before Moge in 1992, the Canadian law of spousal support gave priority to self-sufficiency as part of a "clean break" approach, as spousal support was only intended to facilitate the transition to independence for the recipient. A recipient could be "deemed" to be self-sufficient, based upon optimistic projections of training or likely employment, even after lengthy traditional marriages. Once the recipient found full-time employment of any kind, spousal support would often be terminated or entitlement would be denied. The Moge decision rejected this approach, emphasizing that self-sufficiency is only one of the four objectives set out in s. 15.2(6) and all four objectives must be considered in determining spousal support. Self-sufficiency is no longer to be "deemed" where a spouse continues to experience economic disadvantage after the end of a marriage. Moge directed Canadian courts to take a more realistic view of self-sufficiency, not to underestimate the effects of post-marital disadvantage nor to overestimate the labour market prospects of separated and divorced spouses. Self-sufficiency requires an individualized decision, based upon evidence specific to this recipient and this payor.
The 1999 Bracklow decision said little new about self-sufficiency, as its focus was upon the non-compensatory basis for support, this in a case where the wife was ill and unable to work.
Self-sufficiency was very much an issue in Leskun, where the husband argued that the wife had breached her legal duty
to become self-sufficient, eliciting this response from the Court:
"Failure to achieve self-sufficiency is not breach of
‘a duty’ and is simply one factor amongst others to be taken into account." Leskun also
affirmed the use of review orders, which have proved useful in encouraging and monitoring self-sufficiency in cases of indefinite
spousal support orders.
After Moge, self-sufficiency has not been treated as an absolute standard, requiring the recipient to take any job at the end
of a marriage. As the Ontario Court of Appeal said in Allaire v. Allaire,
"self-sufficiency is not a free-standing
concept. It must be seen in the context of the standard of living previously enjoyed by the parties."
These are very general directions on the subject of self-sufficiency, leaving lawyers, mediators and trial judges to work out specifics in each case. After Moge, the determination of self-sufficiency requires a highly individualized analysis, not amenable to "guidelines". What the Advisory Guidelines can do is to encourage self-sufficiency through various aspects of their design, aspects described below.
Strictly speaking, "self-sufficiency" is a concept primarily of importance in compensatory cases, which can arise under either formula: always under the with child support formula, and in many longer marriages and a few shorter ones under the without child support formula. In these longer marriages under the latter formula, there will be grown up children or one spouse will have subordinated his or her career and employment, leaving one spouse disadvantaged at the end of the marriage. The compensatory exception, described above in Chapter 12, will also raise self-sufficiency issues.
The term "self-sufficiency" has often taken on a broader meaning in practice, with some application to non-compensatory cases too. It can refer to the recipient’s obligation to earn income to his or her present capacity. Or, used even more loosely, it sometimes just means that the payor’s obligation to pay spousal support should be ended and the recipient should be required to live within her or his means.
Entitlement is the first step in the spousal support analysis, before reaching the Advisory Guidelines as to amount and duration. Self-sufficiency is one of the major arguments against entitlement, i.e. the recipient cannot show any "economic disadvantage" or "need" at the end of the marriage. Entitlement issues are discussed at greater length in Chapter 4 above.
"self-sufficiency" as a threshold entitlement issue comes up more often in cases of shorter, childless marriages or in cases where the recipient already has a significant income, whether from employment or investments. Occasionally, as mentioned in Chapter 12 on Exceptions, there will be a very large property award that raises an issue of threshold entitlement.
The Spousal Support Advisory Guidelines are income-based guidelines and thus require much more careful attention to the actual incomes, or the income-earning capacities, of both spouses. By focussing on income, the Guidelines actually encourage a more sophisticated analysis of "self-sufficiency" on the part of the recipient, rather than some rough-and-ready downward adjustment of the monthly amount of support. Consistent with Moge, the question is usually: what income could this specific recipient earn, with his or her experience, education and qualifications? As the B.C. Court of Appeal explained in MacEachern, imputing income provides a ready means of assessing and encouraging self-sufficiency. In that case, the Court imputed a low-wage full-time retail sales income to the wife who was working only part-time and who had not made "wholehearted" efforts, and then fixed the amount of spousal support at the low end of the range under the with child support formula.
Imputing income imposes a discipline on our thinking about self-sufficiency. What sort of employment might the recipient find? Is the employment available full-time or part-time? How much can the recipient realistically contribute to her or his own support? What are the prospects of any improvement in that income? If there is training or education required, how will that change the employment prospects of the support recipient?
The answers to these questions will often generate different estimates of potential income. These estimated incomes can in turn be used to generate ranges under the formulas. Where the recipient’s income, actual or imputed, is lower and the payor has a much higher income, as in many long traditional marriages, then the different estimates of income will often produce little change in the ranges, making the imputation of income less telling to the final outcome. In other cases, however, the spouses’ competing views on how much income to impute to a recipient will be the crux of the spousal support dispute, usually where the recipient might have considerable earning power.
We have already discussed self-sufficiency as a factor affecting location with the ranges in Chapter 9 above.
In some cases, as in MacEachern, a court may opt for the lower end of the formula range for amount, in order to provide the recipient an incentive to earn more. A court may do this even after imputing income to the recipient, especially if the court has been kind in the income imputed.
In other cases, a court may push the amount to the upper end of the range, to provide a recipient with the necessary funds to undertake education or training, all with a view eventually to reduce or even eliminate the support once the recipient obtains higher paying employment. For this option, the court will need a specific plan brought forward by the recipient.
As is explained in Chapter 10 on Restructuring, a court or the parties can "front-end load" spousal support by restructuring, in order to generate a large enough amount of support for a period of education or training by the recipient. Restructuring may be necessary to accomplish this self-sufficiency purpose when even the upper end of the ranges on amount and duration do not generate enough support. Most likely examples would be shorter marriages or lower incomes under the without child support formula or cases of higher child support or lower incomes under the with child support formula.
Another form of restructuring that can promote self-sufficiency is the "step-down order", with the amount of spousal support reducing over time at fixed intervals.
Finally, the lump sum support order is often justified as encouraging self-sufficiency, both by its implicit time limit and by its assurance that the lump sum will not be reduced by any future new employment or income.
For marriages under 20 years in length, apart from the "rule of 65", the without child support formula produces time limits on the payment of spousal support. After a ten-year marriage, for example, the duration of support will be 5 to 10 years. In these cases without children, spousal support will usually be non-compensatory, providing a period of transition from the higher shared standard of living during the marriage back to whatever standard the recipient can sustain by herself or himself. The time limit defines the end of that period.
Time limits provide clear direction to the recipient that support will end and that the recipient will have to obtain income from another source or live at the lower standard of living from that time forward. In this sense, time limits in the non-compensatory setting further the more limited notion of self-sufficiency that operates in such cases.
Many Canadian courts are uneasy about time limits in some longer marriages under 20 years in length and currently prefer to make indefinite (duration not specified) orders. Even in these cases, the Advisory Guidelines still seek to implement time limits, albeit in a "softer" way, by using the process of review and variation to signal the eventual termination of support.
Implicit in Moge is that the Court’s concerns about "deemed self-sufficiency" were largely focussed upon the compensatory setting. Time limits will operate differently in compensatory cases, especially in those cases that fall under the with child support formula. Individual orders will be indefinite in duration, unlike the time-limited orders found in most cases under the without child support formula. The upper and lower ends of the durational range under the with child support formula provide the outer limits of the process of review and variation.
At some point, the recipient’s disadvantage may be fully compensated and complete "self-sufficiency" attained, such that spousal support can terminate in a compensatory case. Under the with child support formula, any termination of support will usually happen through the process of variation or review, as there must be evidence on these issues before a court can terminate or time limit support. In this sense, time limits under the with child support formula are "softer", more flexible than in most cases under the without child support formula.
Even in this "softer" form, however, the time limits under this formula encourage self-sufficiency, in a more structured way than a succession of indefinite orders with no defined end-point.
Along with imputing income, the most frequent mechanism used in our law to promote self-sufficiency has become the review order, a
form of order that was developed after Moge and once described as
"the halfway house between indefinite orders and
time-limited orders". The review order is grounded in s. 15.2(3) of the Divorce Act, the court’s power to
"impose terms, conditions or restrictions in connection with the [spousal support] order as it thinks fit and just". In its
2006 Leskun decision, the Supreme Court of Canada affirmed the use of review orders and identified as three examples justifying their
"the need to… start a program of education, train or upgrade skills, or obtain employment". As part of the
infrastructure of support law, review orders are a critical element of the Advisory Guidelines.
Review orders can permit a court to monitor a recipient’s progress towards self-sufficiency, without any need to prove a change in circumstances. Review hearings can be scheduled at critical times, like the completion of a training or education program or after a child starts full-time school or after a period of job-seeking. After Leskun, the terms of review should be more clearly set out in the terms of the order, "to tightly circumscribe the issue" for the review hearing and thus to avoid relitigation. The court can set out in the court order, or the parties in an agreement, the recipient’s plan, which will form the basis for the review.
Where there are serious questions about the self-sufficiency efforts of a recipient, a court can even make a "terminating review order", i.e. spousal support is time limited, but the time limit is made subject to review and possible extension. This offers an example of a "softer" use of time limits in compensatory cases.
Under the Advisory Guidelines duration of spousal support will be indefinite, under both formulas, where the parties have been married for 20 years or more, or where the "rule of 65" applies. But indefinite support, under the Guidelines as under the current law, does not necessarily mean that support is "permanent" or "infinite", only that the duration has not been specified. We have purposely changed the language in this final version to convey that notion; our new terminology is "indefinite (duration not specified)". Duration may be specified at some point in the future and support terminated, if entitlement ceases.
Even in long traditional marriages, self-sufficiency remains a consideration, "in so far as practicable", to use the language of s. 15.2(6)(d). For the most part, these self-sufficiency issues will come up on a variation where there is a change of circumstances or on a review as described above. Entitlement may then be revisited for any number of reasons — the recipient finding employment, the recipient’s remarriage or repartnering, the payor’s retirement or loss of employment, etc. — and support may be terminated if entitlement has ceased.
Where the recipient does remain entitled to spousal support under an indefinite (duration not specified) order or agreement, the amount of support will inevitably change over time through the process of variation or review. As described above, in some circumstances, income may be imputed to a recipient, to assess or encourage the recipient’s contribution to his or her own support.
All of the above reflect various ways that the Spousal Support Advisory Guidelines can
"promote self-sufficiency" as required
by s. 15.2(6)(d) of the Divorce Act. In the end, however, the real encouragement for self-sufficiency is not found in spousal
support law, or in the Advisory Guidelines, but in the harsh economic reality facing most separated or divorced spouses. In all but
the highest income cases, a recipient must find more income in order to avoid a drop in her or his standard of living, as spousal
support is limited by the payor’s ability to pay. The limits of that ability to pay spousal support will be reached more
quickly under the with child support formula, given the priority to child support.
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