Recently, a Justice of the Court of Queen’s Bench in Alberta denied a wife’s claim for compensatory spousal support – after a 25 year relationship – on the basis that she recklessly depleted her assets, she had not made sufficient effort to return the workplace and she was not taking the necessary steps to utilize her existing assets for her own support. The Wife successfully appealed that decision.
In J.L.H. v. R.S.W. 2017 ABCA 98 the husband and wife separated after many years of living beyond their means and sparing no cost for their children (private school, nannies, extensive travel). The husband was a high income earner and earned a “large gain” of $5.548 million through a successful business transaction in 2006. The parties equally split those funds. The husband retired and the parties separated in 2008.
The parties did not temper their spending after separation and both continued in their lavish ways. By the time of the trial the wife had spent all but $200,000.00 of her $2.774M assets. She remained in the large expensive home and had to rely on the remaining assets to support herself since she was not working nor was she receiving spousal support. By this time, the husband who experienced significant losses in the 2008 financial crisis, returned to work – still living lavishly but now having a $500,000 annual income (with the possibility of stock options and bonuses).
The trial judge found that the wife had not suffered any loss as a result of the marriage or its breakdown – she had a ½ interest in the matrimonial home, received ½ of the gain earned by the husband in his business venture. The trial judge also found it unreasonable that the wife refused to sell the matrimonial home and downsize and that her budget should be reduced accordingly. A $50,000.00 income was attributed to the wife as well as a further $50,000 of investment income. The trial judge did award to the wife needs based spousal support.
How does the Alberta court of appeal see this issue?
The Court of Appeal took issue with that trial judge’s conclusion that there was no claim for compensatory spousal support on the basis that the wife had not suffered any economic disadvantage from the marriage or its breakdown since she had received a division of the matrimonial assets.
Referring to the Supreme Court of Canada decision of Moge v. Moge, the Court of Appeal noted that the division of matrimonial property is only one factor in spousal support. These assets should be factored in when considering the condition, means, needs and other circumstances of each spouse. The Court of Appeal affirmed that the matrimonial property division is one branch of the compensatory spousal support analysis however another branch is the impact that the marriage and its breakup will continue to have on the spouses post-separation.
The Court of Appeal found that notwithstanding the property division, the wife found herself economically uncompetitive with outdated qualifications – all arising from the role assumed by her in the parties’ long term marriage and that she was disadvantaged by this role in the marriage. As such, a claim for compensatory spousal support arising out of the breakdown of the marriage was demonstrated. In respect of the dissipation issue (the Court acknowledging that one or both spouses have irresponsibly dissipated matrimonial assets) the Court stated that a “recipient spouse cannot artificially increase “needs” by squandering assets but neither can the payor spouse artificially reduce the “means to pay” by irresponsible spending.” (para 25).
At the end of the day, the Court relied on the mid-range of the Spousal Support Advisory Guidelines to determine the arrears of spousal support as well as go forward spousal support. While the trial judge ordered that spousal support would terminate in 5 years when the husband turned 62 year of age with no review (the husband having testified to his intent to retire at that age), the Court of Appeal found it inappropriate that ongoing spousal support would not be reviewable. No end date was ordered rather either party could apply for a review on the basis of a material change of circumstances. This case gives much insight to the Alberta Court of Appeal’s approach to compensatory and needs-based spousal support in long term marriages when even in the face of significant depletion of assets (on both parties’ part) compensatory and needs based support claims are awarded and there is reliance on the SSAGs as more than a tool.