In the matter of Peel v. Peel, the Ontario Superior Court of Justice analyzed the issue of changing spousal support and child support terms included in a duly executed Separation Agreement. This case is a good example of the implications associated with resolving marital issues by way of an Agreement, or court order.
In Peel, the Applicant Father sought to reduce his child and spousal support obligation, as set out in a Separation Agreement dated July 5, 2006. As evident in this case, changing terms of an Agreement may require the very court involved that the parties initially tried to avoid.
The parties were married on June 9, 1989, separated on January 2005, and divorced on July 21, 2007. There were two children of the marriage born in 1990 and 1995.
In 2006, the parties entered into a Separation Agreement, which included terms regarding child and spousal support, special and extra-ordinary expenses, and interim joint custody.
For purposes of determining support for the Agreement, the Applicant Father’s income was imputed. In his Application he sought a reduction in his ongoing support as of the date of the Application, asserting that the imputed income used for the Agreement was erroneous. He further asserted that one of the children was no longer a dependent for child support purposes.
The Applicant Father brought his application as a ‘variation’ pursuant to s. 17 of the Divorce Act, which applies to varying existing orders based upon a material change in circumstance.
A relevant issue in Peel was addressing the appropriate method of reviewing the Applicant Father’s application, because the existing court order requirement for s.17 applicability was not present.
Due to the fact that the parties entered into a Separation Agreement, the court looked to both s. 15.1 and s.15.2(4), which are applicable to initial applications for child and spousal support, where an Agreement is already in place. (It is important to note that amending a Separation Agreement is possible and does not require court involvement, however, the parties would have to agree on the amending terms.)
The court noted that the objectives of s.17 and s.15.2 are in fact identical, but emphasized that the factors to be considered for each are quite different.
The material change in circumstances required for court orders under s.17 is a change in the condition, means, needs or other circumstances of either former spouse, such that had the conditions been present when the order was made, there would likely be different terms in the order.
On the other hand, where there is an Agreement under s.15, relevant case law establishes that the court is concerned with the extent to which an existing agreement should be incorporated into a first court order for support.
The court summarized the dichotomy between the two sections by stating that the threshold is broader where no court order exists under s.15, however, much more restricted where there is an existing order under s.17.
For both sections, however, where there are Agreements in place, case law establishes that the courts should not look into the parties’ arrangement in a vacuum, but should consider the totality of the circumstance at the time of the Agreement. To do so, the court applied the Miglin analysis, which has been adopted by the Supreme Court.
Step one of this analysis requires consideration of the circumstances in which the Agreement was negotiated and executed in order to determine whether there is reason to discount the Agreement. If the court is satisfied with the circumstances, the next step of stage one requires the court to consider the substance of the Agreement, to determine whether the Agreement satisfies the objectives of the Divorce Act: finality, certainty, and autonomy.
Satisfying stage one of Miglin, means that the Agreement is given great weight. In stage two, however, the court must then determine the extent to which enforcing the Agreement still reflects the original intention of the parties.
It was determined that the Applicant Father should have brought the matter under s.15 rather than s.17. It was further determined that weight should be given to the parties’ Agreement. The court then established that child support should be changed as one of the children was indeed no longer a dependent. The court did not change spousal support because in assessing the means and needs of the parties, the length of the marriage, and their roles during the marriage, there was no reason to change the quantum of support as set out in the parties’ Agreement. The court even went so far as to comment that had the same facts been applied to an existing order under s.17, there were insufficient grounds to satisfy the test of ‘material change in circumstance’.
In Canada, for policy reasons Separation Agreements are encouraged and careful drafting can help alleviate future court involvement. By the same token, however, change is inevitable, and it is important to be mindful of the thresholds associated with altering support as set out in an Agreement, or varying an order made by the court. It is important to remember that it can be a different test for varying a separation agreement rather than a court Order; however, the Separation Agreement or court order may specifically set out the test for the change to take place and they must be reviewed carefully.