Spousal Support Advisory Guidelines: The Revised User's Guide

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3 Entitlement (SSAG Chapter 4)

An analysis of entitlement is the crucial first step before any application of the Guidelines. In practice this step is often ignored, the assumption being that any income disparity that produces a positive range for amount under the SSAG formulas means there must be entitlement.

The Advisory Guidelines do not determine entitlement. They deal with the amount and duration of support after entitlement has been established. They do not provide an arithmetical basis for entitlement. Entitlement is a threshold issue that must be determined before the Guidelines will be applicable. The existing legal framework recognizes three bases for entitlement: compensatory, non-compensatory, or contractual. If there is a finding of no entitlement, the Guidelines are not applicable. The SSAG formulas may offer some clues, or checks, about entitlement, but nothing more. Even if entitlement is established, the analysis of entitlement will inform many subsequent steps in a SSAG analysis.

Three early appellate level decisions continue to provide good models of the preliminary analysis of entitlement: Yemchuk v. Yemchuk, 2005 BCCA 527; Chutter v. Chutter, 2008 BCCA 507 and Fisher v. Fisher, 2008 ONCA 11.

Ignoring or assuming entitlement leads to some common errors:

• A mere disparity of income that produces a positive range for amount under the Advisory Guidelines formulas does not automatically lead to entitlement. More analysis is required: why is there an income disparity and how does this relate to the compensatory or non-compensatory basis for entitlement?
• A zero range for amount should not be confused with a lack of entitlement. It may simply reflect a current inability to pay, especially under the with child support formula.
• Even if entitlement is established, determining the basis for entitlement is still important as this will inform the subsequent steps of the spousal support analysis and the application of the Guidelines.
• Duration marks the end of entitlement. Spousal support can end despite a continuing income disparity.
• Variation and review will often raise issues of entitlement. You cannot simply apply the formulas to current incomes, without thinking again about entitlement.

First a review of the basic principles of entitlement is in order.

(a) The principles of entitlement

• Compensatory claims are based either on the recipient’s economic loss or disadvantage as a result of the roles adopted during the marriage or on the recipient’s conferral of an economic benefit on the payor without adequate compensation.

  Common markers of compensatory claims include: being home with children full-time or part-time, being a “secondary earner”, having primary care of children after separation, moving for the payor’s career, supporting the payor’s education or training; and working primarily in a family business.

  Some lawyers and judges erroneously think that any long marriage gives rise to compensatory support, but the Ontario Court of Appeal decision in Fisher, above, makes clear that this is incorrect. Compensatory support is to be distinguished from non-compensatory support (see below), which is based upon economic interdependency and loss of the marital standard of living.

  Our review of recent case law has shown some “backsliding” on compensatory support, with the analysis seriously underestimating compensatory claims. Common errors include:

  • focussing on where the claimant was at the beginning of the relationship instead of on where the claimant would have been if they had continued in the labour market. Avoid the “once a secretary, always a secretary” error.
  • finding no compensatory entitlement simply because the claimant worked throughout the marriage. There may still have been career loss.
  • forgetting that compensatory claims for lost earning capacity can be based not only on child-rearing during the marriage, but also on child-rearing responsibilities after separation.
  • assuming no career advantage to the payor from the fact that the other spouse stayed home and cared for children. Compensatory entitlement can be based on the economic advantage of an uninterrupted career enjoyed by one spouse as a result of the other spouse’s assumption of a disproportionate share of child care responsibilities.

  For good analyses of compensatory claims see Yemchuk, above; Chutter, above; Cassidy v. McNeil, 2010 ONCA 218; Hartshorne v. Hartshorne, 2010 BCCA 327, Abernethy v. Peacock, 2013 ONSC 2045, Gray v. Gray, 2014 ONCA 659, Schimelfenig v. Schimelfenig, 2014 SKCA 77, Elliston v. Elliston, 2015 BCCA 274, Morigeau v. Moorey, 2015 BCCA 160; and Zacharias v. Zacharias, 2015 BCCA 376.

• Non-compensatory claims involve claims based on need. “Need” can mean an inability to meet basic needs, but it has also generally been interpreted to cover a significant decline in standard of living from the marital standard. Non-compensatory support reflects the economic interdependency that develops as a result of a shared life, including significant elements of reliance and expectation, summed up in the phrase “merger over time”.

  Common markers of non-compensatory claims include: the length of the relationship, the drop in standard of living for the claimant after separation, and economic hardship experienced by the claimant.

  For nice analyses of entitlement on non-compensatory grounds see Fisher, above: McKenzie v. McKenzie 2014 BCCA 381: and R.L. v. L.A.B., 2013 PESC 24.

  In a small subset of cases a narrower view of non-compensatory support has recently been articulated. Judicial understandings of the non-compensatory basis for entitlement reveal continuing uncertainty and tension, with some judges taking issue with the broad view of non-compensatory support that has become dominant since the 1999 Bracklow decision. These judges have expressed the view that non-compensatory support should primarily be confined to cases involving economic hardship (or true “need”) and have questioned  entitlement based on income disparity and loss of standard of living alone. For the most extensive discussion of this, see Lee v Lee, 2014 BCCA 383. In cases where economic hardship is not involved, this view can lead either to findings of no entitlement to non-compensatory support (see below) or to very short “transitional” awards to cushion the drop in standard of living, even in long marriages: see Lee, above and Kirton v. Mattie, 2014 BCCA 513. It should be noted that Lee involved a male claimant, as do a number of these “narrower view” cases, which makes it hard to discern if this is really a theoretical shift in the analysis.

• Cases where need arises post-separation can raise issues of whether there is an entitlement to non-compensatory support; see Tscherner v. Farrell, 2014 ONSC 976; Fyfe v. Jouppien, 2011 ONSC 5462; Soschin v. Tabatchnik, 2013 ONSC 1707; and M.E.K. v. M.K.K., 2014 BCCS 2037. (These cases are further discussed under “Changing Incomes” below).
• In many cases there may be entitlement on both bases. For example, in long marriages with children there are often significant elements of both compensatory and non-compensatory support. In the early years, the compensatory element may predominate, but later the non-compensatory claim may come to the fore.
• A large property award does not necessarily preclude entitlement on either compensatory or non-compensatory grounds: see Chutter v. Chutter, 2008 BCCA 50; Bell v. Bell, 2009 BCCA 280; and Berta v. Berta, 2014 ONSC 3919.
• If there is a significant income disparity, entitlement on either compensatory or non-compensatory grounds may be established despite the fact that the recipient has a relatively high income and could on some understandings of the term be seen as “self-sufficient”: see Gillimand v. Gillimand, [2009] O.J. No. 2782 (S.C.J.) (entitlement for wife earning $93,000 as pilot); Gonabady-Namadon v. Mohammadzadeh, 2009 BCCA 448 (entitlement for wife earning $150,000 as doctor); Mehlsen v. Mehlsen, 2009 SKQB 279 (entitlement for wife earning $70,000); Cassidy v. McNeil, 2010 ONCA 218 (wife earning $85,000); Marzara v. Marzara, 2011 BCSC 408 (wife’s income $104,000); McKenzie v. McKenzie 2014 BCCA 381 (entitlement for wife earning $200,000); Berta,above (entitlement for wife with income of $458,000); and B.L.B. v. G.D.M., 2015 PESC 1 (interim entitlement for wife earning $185,000).
• Bracklow also articulates a third basis for entitlement, the contractual basis, which covers not only formal domestic contracts but also implied or informal agreements. For a recent appellate level decision that has engaged this basis of entitlement see Stergios v. Kim, 2011 ONCA 836 (entitlement found on compensatory, non-compensatory and contractual grounds; wife and her family supported husband to achieve his career potential in Korea; husband had undertaken to do same for wife and support her education once he had sponsored her immigration to Canada). For two trial decisions, both involving immigration sponsorship agreements, see Carty-Pusey v. Pusey, 2015 ONCJ 382 (husband withdraws immigration sponsorship, entitlement found on non-compensatory and contractual basis) and Niranchan v. Naddarajah, 2015 ONCJ 149.

For a good review of entitlement see Rollie Thompson, “Ideas of Support Entitlement” (2014), 34 Canadian Family Law Quarterly 1.

(b) Entitlement as a threshold issue: income disparity alone does not mean entitlement

On its own, a mere disparity of income that would generate an amount under the SSAG formulas, does not automatically lead to entitlement. Entitlement must be proven (or agreed upon) on a compensatory or non-compensatory basis, before the formulas and the rest of the Guidelines are applied.

The Advisory Guidelines were drafted on the assumption that the current law of spousal support, post-Bracklow, offers a very expansive basis for entitlement to spousal support, leaving amount and duration as the main issues to be determined in spousal support cases.

Judicial statements of principle do emphasize, repeatedly, that income disparity alone does not automatically mean entitlement to spousal support; see Lee, above, and R.L. v. L.A.B., above. However, in practice entitlement will generally be found in cases where there is a significant income disparity at the time of the initial application. Even if there is not a compensatory claim, a significant income disparity will often give rise to a non-compensatory claim based on a loss of the marital standard of living. The Guidelines leave to the courts the issue of when an income disparity becomes significant enough to generate entitlement. In some cases courts have denied entitlement on the grounds that the income gap does not suggest significant differences in standard of living.

Cases where there has been a finding of no entitlement on an initial application despite a significant income disparity are somewhat atypical and tend to be very fact-specific. Many are cases involving non-compensatory support. In many of these cases another judge may well have found entitlement. Factors that have justified a finding of no entitlement despite income disparity include the following, which often overlap:

• a short marriage and a limited period of financial interdependency: see Beese v. Beese, 2006 BCSC 1662; McKee v. Priestlay, 2007 BCSC 85; Rezel v. Rezel, [2007] O.J. No. 1460 (S.C.J.); S.C.J. v. T.S.S., 2006 ABQB; Serpa v. Yeuping, 2007 BCSC 43; and Merko v. Merko, 2008 ONCJ 530.
• no financial interdependence during the marriage, rebutting the presumption of mutual support: see Tomlinson v. Tomlinson, 2012 ABQB 509 (wife wanted husband to work).
• despite the income disparity, the parties have similar standards of living because for example. This may be because of differences in the parties’ asset positions (see Elias v. Elias, 2006 BCSC 124; Johnson v. Johnson, 2006 BCSC 1932; and Kerr v. Erland, 2014 ONSC 3555) or differences in their costs of living (see Eastwood v. Eastwood, 2006 NBQB 413), or because the income difference is not that significant (see Vlachias v. Vlachias, 2009 BCSC 843).
• the recipient’s income may actually be higher than stated (Yar v. Yar, 2015 ONSC 151) or the recipient is capable of earning more income (Lewicki v.Lewicki, 2014 BCSC 1653; and Tomlinson v. Tomlinson, 2012 ABQB 509). (This concern should be dealt with by way of proper imputing of income, but in some cases it may be difficult to do so.)
• the payor’s income, although above the “floor” of $20,000, is limited and there is a finding of no ability to pay; see Hurley v. Hurley 2012 NSCA 32; Peters v Peters, 2015 ONSC 4006; and Sarmiento v. Villarico, 2014 BCSC 455.
• custodial payor cases where the non-custodial parent’s claim is non-compensatory and courts give priority to the needs of the custodial household. These cases typically involve male claimants: see Kay v. Kay, 2014 ONSC 5210; Stephens v Stephens, 2013 ONSC 7082; Tomlinson v. Tomlinson, 2012 ABQB 509; and Widney v. Widney, 2014 BCSC 1694.
• the recipient has not experienced any significant economic hardship or decline in standard of living from the marriage: see Lamothe v. Lamothe 2006 CarswellOnt 8150, [2006] O.J. No. 5045 (S.C.J.); J.J.G. v. K.M.A., 2009 BCSC 1086; Lam v. Chui, 2008 BCSC 1177; Beaudry v. Beaudry, 2010 ABQB 119; and Heard v. Heard, 2014 ONCA 196.
• the recipient failed to contribute to the relationship: Lamothe, above, (husband unemployed for much of marriage); S.C.J. v. T.S.S., 2006 ABQB 777 (short common law relationship, wife unemployed, gambled extensively and problems with drugs and alcohol); and G.G.F. v. R.F., 2009 BCPC 43 (wife drug addict).
• the income disparity is the result of post-separation events or choices, such as a job loss on the recipient’s part or post-separation disability (see Rezel v. Rezel, [2007] O.J. No. 1460 (S.C.J.); Barton v. Ophus, 2009 BCSC 858; Howe v. Howe, 2012 ONSC 2736; and Peters, above) or a post-separation increase in the payor’s income (see Eastwood v. Eastwood, 2006 NBQB 413; Fisher v. Fisher, 2009 ABQB 85; and Regnier v. Regnier, 2014 ONSC 5480).
• courts reject or ignore a non-compensatory claim based on loss of marital standard of living and, in the absence of either a compensatory claim or economic hardship, find no entitlement; see Rajan v. Rajan, 2014ONSC 6690 and Griffiths v. Griffiths, 2011 ABCA 359.
• male claimants. A significant number of the cases where no entitlement is found on the basis of the various grounds listed involve male claimants. Gender bias and stereotypes are less prevalent, but not dead yet.
• property division has satisfied any compensatory or needs-based claims, most often in B.C. as a result of significant reapportionment on spousal support grounds under the old Family Relations Act. There will be fewer instances of this in future, in light of the new provisions in the British Columbia Family Law Act (see below under “Exceptions”).

(c) A zero range for amount should not be confused with a lack of entitlement; it may simply reflect current inability to pay

Under the with child support formula there can be an income disparity and yet nothing but zeros for the range: 0 to 0 to 0. It is a mistake to automatically assume that this means no entitlement. Zeros may mean no entitlement, if the income disparity at the end of the marriage is not large because both spouses have worked full-time in the paid labour market. However, zeros may just reflect the priority given to child support and the reality that there is “no ability to pay” left despite a significant compensatory entitlement: think of any middle-income family with three or four children, where one spouse works part-time. There is entitlement, just no money, and the claim might revive under s. 15.3 of the Divorce Act, once the children leave home or finish post-secondary education and ability to pay returns for the payor. See also the exception for inadequate compensation under the with child support formula (SSAG 12.11), discussed under “Exceptions” below.

(d) Entitlement and the subsequent steps in the application of the Guidelines

Even if entitlement is found, the basis of entitlement shapes the determination of the amount and duration of spousal support. It thus informs many of the subsequent steps in the application of the Advisory Guidelines.

The Guidelines formulas reflect different bases of entitlement:

• the without child support formula is based on a mix of compensatory and non-compensatory entitlement:
  • when applied to short and medium length marriages without children, it generates largely non-compensatory support, providing a time-limited transition from the marital standard of living;
  • when applied to longer marriages in which there may or may not have been children, its ranges reflect a mix of compensatory and non-compensatory support
• the with child support formula is largely compensatory, responding to the economic consequences of both past and on-going child-rearing responsibility, but there is also an element of non-compensatory support.

The delineation of the compensatory and/or non-compensatory basis for entitlement assists in the application of the formulas in several ways:

• to determine location within the ranges. For example, a strong compensatory claim may push toward the higher end of the range (see “Choosing Location in the Range” below).
• to determine whether or not the case justifies a departure from the ranges as an exception. For example two exceptions are triggered by compensatory claims that may not be adequately satisfied by the formula ranges: the compensatory exception for short marriages without children and, in cases with children, the s. 15.3 exception for compensatory claims that are deferred because of the priority of child support (see “Exceptions” below). The disability exception responds to a specific subset of non-compensatory claims.
• to determine whether there is entitlement to a payor’s post-separation income increase. A compensatory basis for entitlement may provide a stronger claim for sharing than a non-compensatory basis.
• to determine the impact of remarriage and repartnering. The effect of remarriage can differ depending on whether the initial award was compensatory or non-compensatory; see Kelly v. Kelly, 2007 BCSC 227 and Zacharias v. Zacharias, 2015 BCCA 376. (See also “Remarriage and Repartnering” below.)

(e) Duration as the end of entitlement

Duration is often forgotten in the SSAG analysis. The formulas generate ranges for amount and duration. Amount cannot be considered alone. Duration is nothing more or less than the end of entitlement. When support stops, there may still be – and usually is – an income disparity between the spouses.

The SSAG formulas generate time limits which delineate the end of entitlement:

• Under the without child support formula and the custodial payor formula, which is modelled on the without child support formula, time limits are generated for relationships of less than twenty years (or for those with an older recipient under the “rule of 65”).
• Under the with child support formula, there are also time limits, but softer and more flexible, only implemented through variation and review. Even here, it is possible, even likely, that support will end despite the presence of a continuing income disparity.

(f) Entitlement issues on variation and review

Even if initial entitlement has been established, new issues of entitlement may arise in the context of variation and review. Issues such as the payor’s post-separation increase and the impact of remarriage and repartnering take us back to the basis of entitlement, as do cases of the recipient’s post-separation reduction of income. Furthermore, applications to terminate spousal support on the basis that the recipient has become “self-sufficient” are really questions about whether the initial basis for entitlement continues to exist. Self-sufficiency can be interpreted differently depending on the initial basis of entitlement: see Fisher v. Fisher, 2008 ONCA 11.

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