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Davies v Quantz, 2010 CarswellOnt 9748 (Ont CA)

The following judgment was an appeal from the Ontario Superior Court of Justice.  The decision of Justice Marshman, which was subsequently upheld by a unanimous Court of Appeal, dealt with the duration and amount of spousal support under the with-child support formula of the Spousal Support Advisory Guidelines (SSAG).

This case involved a couple who, although married 11 years, cohabited for a period of 18 years and 3 months.

A crucial factor in Justice Marshman’s analysis was the fact that Ms. Davies (the wife) was highly educated.  Throughout the early years of the couple’s cohabitation, Ms. Davies completed a Bachelor of Science, worked in a laboratory and then decided to switch careers, returning to school to receive a Bachelor of Commerce.  Throughout the 1990s, Ms. Davies worked for large companies, and by 1999, she had built up a strong clientele basis, obtained a license to sell insurance, and became a certified financial planner.

Mr. Quantz (Ms. Davies’ husband) was also highly educated; throughout their relationship he obtained a degree in medicine and became a respected cardiovascular surgeon.  After marrying in 1997, the couple had two children.  In 2000, the husband was offered a job in London, Ontario; when the family relocated, the wife gave up her job and did not work outside the home again.

The couple separated in 2008.  At the time, neither party had a significant net worth and, accordingly, the equalization payment was only about $81,000.  Justice Marshman calculated the husband’s income at $428,000 which resulted in child support of $5,217/month.

The main issue in this judgment was the amount and duration of spousal support to be paid to Ms. Davies.  In determining amount and duration of spousal support, a court first must conclude whether the applicant (the mother, in this instance) is entitled to support.  Case law in this area has careened back and forth over the years, but currently, there are three justifications for entitlement to child support:

  1. Compensatory basis: career sacrifice and familial contribution (Moge v Moge, 43 RFL (3d) 345 (SCC))
  2. Contractual basis: where there is an implied or explicit domestic contract
  3. Non-Compensatory basis: based on need only (Bracklow v Bracklow, 44 RFL (4th) 1 (SCC))

The courts are also mindful of the judgment in Pelech/Pelech trilogy which highlights the importance of self-sufficiency on the part of the support recipient.  This approach may work against entitlement, especially in instances where the applicant is seen as capable of someday sustaining a similar lifestyle independently of their spouse.

In applying the aforementioned principles, Justice Marshman noted that in the first 9 years of cohabitation, the parties were both pursuing education and establishing their careers, and shared equally in the household responsibilities.

In contrast, for the last 9 years of cohabitation, the wife became a traditional housewife and the husband supported the family financially.  Overall, Justice Marshman found that the wife had been severely disadvantaged because of the role she assumed during the latter half of the marriage, as she gave up a lucrative career when she decided to move to Ontario with her husband.  Despite the fact that the wife had known since September 2007 that her husband was hoping that she would resume a career, the wife established entitlement to spousal support both on a compensatory basis (Moge) and because of need (Bracklow).

Once entitlement to spousal support has been established, the court will turn to the SSAG to determine the appropriate amount and duration of support; this will depend on the application of one of two formulas: the with-child support formulaand the without-child support formula.  Although only advisory, the SSAG are nonetheless influential and courts will usually only vary them where there is justification to do so.  Since the husband’s income in this case was above $350,000, Justice Marshman discussed the section of the Guidelines dealing with the ceiling of $350,000.  Justice Marshman held that there is no absolute ceiling or “cap,” only an income level above which the standard fixed-percentage-of-income formula can be varied to generate a lesser percentage of income above that level.

As Justice Marshman noted in her judgment, the authors of the Guidelines discuss two possible approaches to support when the payor earns $350,000 or more.

The first approach uses the formula to determine a minimum amount for spousal support (an approach called “minimum plus”).  In order to determine the “minimum” spousal support range, a notional calculation is required to calculate spousal support at the $350,000 ceiling, using the child support payable at the ceiling.  There would be discretion to add to that minimum for incomes over $350,000.

The second approach would be one of pure discretion.  Once the payor’s income exceeds the ceiling, there would be no “minimum” for spousal support just a dollar figure that would take into account the actual amount of child support paid, an amount which can be very large for high income cases.  This approach becomes more relevant where the payor’s income is well above the ceiling.

Despite s. 15.2(3) of the Divorce Act, which authorizes the court to make a spousal support order for a definite or indefinite period, Justice Marshman concluded that Ms. Davies should be awarded $9,440/month for a period of 8 years.  In making a time limited support order, Justice Marshman noted that:

…the children are at an age where Ms. Davies could begin looking for work…[Ms. Davies] considers her career to be that of a mother but, given the separation, it is not realistic for her to wait until she is over 50 to even consider entering into the workforce.  Ms. Davies is a bright, well-educated woman who could have significant earning capacity if she put her mind to it.  In all of the circumstances, I find it appropriate to order spousal support which is above the range provided for a payor earning $350,000 but at the lowest end of the range for a payor earning $428,000.

In the end, Justice Marshman determined that the wife should receive spousal support at the low end of the range for her husband’s income, leaving her with 54.1% of the parties’ net disposable income. The Court of Appeal deferred to the trial judge and found no error.

The Court of Appeal did note, however, that there is nothing to prevent the wife from reapplying if circumstances are such that she can demonstrate that support should be continued beyond the 8 year period.