Imposing Mechanism For Repayment Of An Overpayment Of Spousal Support
Czerlau v. Czerlau, 2015 ONSC 855
This case considers the issue of whether a Court has discretion to impose a mechanism for repayment of an overpayment of spousal support when the Separation Agreement does not specify how repayment is to be made.
Relevant Terms of the Separation Agreement
The Appellant, Mr. Czerlau, and the Respondent, Ms. Czerlau, entered into a Separation Agreement in 2009, in which the parties agreed that the Appellant would pay spousal support to the Respondent in the amount of $2,650.00 per month for a total of $31,800.00 per year.
The parties specified in their Separation Agreement that the first $20,000.00 of the Respondent’s annual employment income shall not impact the amount of support payable to the Respondent each year, however, the amount of spousal support shall be reduced by 50% for each additional dollar that the Respondent’s combined gross annual income from employment and spousal support exceeds $52,000.00.
The Separation Agreement further specified that the amount of spousal support shall be reduced by 100% for each additional dollar that the Respondent’s combined gross annual income from employment and spousal support exceeds $60,000.00.
The Separation Agreement did not specify the how overpayments of spousal support would be repaid to the Appellant or the period of time over which such overpayments would be repaid.
Overpayments and Adjustments to Spousal Support
The Appellant paid support during 2009 based on the premise that the Respondent’s income did not exceed $52,000.00, however, the Respondent reported gross income of $54,130.00 in 2009. According to the Agreement, spousal support should have been reduced by 50% of the excess $2,130.00 of income and the Appellant had overpaid the Respondent by $1,065.00 in 2009. The parties arranged for repayment of the amount of overpaid spousal support from 2009 to be done in equal installments over 12 months in 2010.
Similarly, the support paid throughout 2010 was based on no increase in the Respondent’s income. Consequently, when the Respondent reported gross income of $64,379.00 in 2010, the parties arranged for the amount of spousal support that was overpaid during 2010 to be repaid in equal installments over 12 months in 2011.
The Respondent obtained further increases in employment income in each of the subsequent years resulting in further overpayment of spousal support in 2011, 2012, and 2013. The parties were in agreement regarding the amount that was overpaid during 2011, 2012, and 2013, which was a total of $30,556.00. The Respondent paid the Appellant $6,019.00 toward the 2011 and 2012 overpayment, however, the parties disagreed regarding the manner of overpayment for 2011 and 2012.
The Appellant brought a motion to change, seeking to cease paying support until the Respondent had completed repayment of the 2011 and 2012 overpayments.
The respondent subsequently filed the Separation Agreement to have it enforced through the Family Responsibility Office (“FRO”) pursuant to s.35 of the Family Law Act.
The Trial Court
The Appellant was of the position that his spousal support payments should be reduced to zero until repayment of the 2011 and 2012 overpayments was complete.
The Court held that repayment of the overpayment of spousal support for 2011 and 2012 should be made over 24 months following and repayment of the 2013 overpayment was to be completed over the 12 months of 2014.
Issues on Appeal
The issue dealt with by the Court was whether repayment of the 2011 and 2012 overpayment should be completed over a 24-month period as was ordered by the Trial Court.
The Applicant was of the position that repayment pertaining to the overpayment in 2011 and 2012 should be made during one 12-month period such that the Appellant would pay no further support until repayment was made in full.
Further the Appellant was of the position that the Trial judge erred by ordering that repayment was to be made over 24 months.
The Respondent was of the position that the Separation Agreement did not specifically address how repayment was to be made and it is within the Court’s discretion to order repayment to be made over two years.
Analysis and Decision
The Court based its decision on the following considerations:
- The Separation Agreement did not specify the mechanism for repayment of any established overpayment of spousal support;
- The parties had historically agreed to adjust prior year’s overpayments equally over the 12 months immediately following said overpayments and the Trial Court’s decision was consistent with that approach;
- Repayment of multiple years of overpayments was not contemplated by the parties at the time of the Separation Agreement; and
- The Court had full discretion to interpret the parties’ Separation Agreement in view of the parties’ circumstances and the court may order repayment of overpaid spousal support “in whole or in part” pursuant to sections 8.4(4), 8.4(5), and 27 of the Family Responsibility and Support Arrears Enforcement Act (FRSAEA), 1996, which read as follows:
8.4(4) A court that finds that a support obligation has terminated may order repayment in whole or in part from a person who received support after the obligation was terminated if the court is of the opinion that the person ought to have notified the Director that the support obligation had terminated.
8.4(5) In determining whether to make an order under subsection (4), the court shall consider the circumstances of each of the parties to the support order.
27(5) The court shall determine the issue in a motion under subsection (1) or (2) in a summary manner and make such an order as it considers appropriate in the circumstances.