preload

Standing up to inflation by varying one outdated spousal support order or agreement at a time

• by Deniz Yilmaz

Originally published at The Lawyer’s Daily

Standing up to inflation by varying one outdated spousal support order or agreement at a time

Amidst the steepest inflation rate in decades and food prices rising by 8.8 per cent this past year, many Canadians face the growing difficulty of affording daily expenses. This strain is especially felt by those experiencing income instability, including the elderly and those with disabilities.

Given this context, it may be time to check your spousal support order or agreement and see whether it can be varied in light of these economic uncertainties.

There is existing precedent where courts have accepted that inflation can justify variation of spousal support — so long as it amounts to a “material change in circumstances”. Courts have particularly been concerned with how inflation can have an “eroding” effect on spousal support. In other words, the recipient’s decreased purchasing power that results from increased costs of living can affect the value of support payments.

Yet, as affirmed in Campbell v. Campbell, [1983] M.J. No. 35, “this is not to say that the mere fact of inflation will automatically result in a proportionate or any increase in maintenance. The circumstances of each case must govern the result.” In Campbell, the court found that inflation outpaced the wife’s ability to maintain herself, while there was no evidence that showed the husband had suffered in any way because of inflation.

Similarly, in Klassen v. Klassen [1974] O.J. No. 212, the court held that due to the father’s increased earnings, the economic situation including inflation and the lessening of the purchasing power of the dollar was a substantial enough of a change to vary the support order. In Winsor v. Winsor [1992] O.J. No. 1048, the Ontario Court of Appeal held that considered cumulatively, inflation had a serious eroding effect on the amount that the wife was receiving for maintenance and did constitute a material or significant change of circumstances. Accordingly, the wife’s support was increased by approximately 30 per cent.

In the recent decision of Nault v. Nault [2022] O.J. No. 708, the court found that while the payor’s income had kept pace with inflation, the payee spouse’s Ontario Disability Support Program (ODSP) income had not. Per a spousal support order from 2013, the support amount was set to $1,000 per month — which was $350 below the low end of the Spousal Support Advisory Guidelines (SSAG) recommendation. The difference of $350 is not immaterial, especially when considered in the context of the payee’s modest ODSP income.

There is a nexus here between inflation, its impacts on the payee’s ability to meet their needs, and whether inflation disproportionately impacts one spouse. In Single v. Single [1986] N.S.J. No. 419, inflation was deemed to have an almost equal adverse effect on both spouses, such that both parties were in the same position relative to each other as they were pre-inflation. Thus, the court held that inflation did not justify varying spousal support.

Another important element is the presence of indexing provisions in spousal support orders, otherwise known as CPI clauses. These clauses provide for the automatic adjustment of spousal support on an annual basis to reflect recognized increases in the cost of living per the Consumer Price Index (CPI). CPI clauses are less common in the era of SSAGs but remain an available tool.

In Nault, the solution involved varying the spousal support order to include a CPI clause which requires spousal support to be increased annually by the specified CPI factor. For recipients of spousal support who do not have CPI clauses, it may be helpful in times of inflation to add such clauses.

So what should a client keep in mind when considering whether to vary their existing spousal support orders or agreements? The following is a brief summary:

First, they should consider whether they are having trouble affording daily expenses since the spousal support order was made. Spousal support that went a long way in 2013 evidently does not go a long way in 2022. This was the court’s finding in Nault, where the recipient spouse’s needs had increased due to the increase in her cost of living. Similarly, in Campbell, the court found that the recipient spouse was no longer able to “live decently” on spousal support payments of $450 a month.

Second, is the spousal support order missing an indexing clause? Indexing clauses help ensure that spousal support payments stay up to date with changes in prices of consumer goods. The recipient’s final spousal support order in Nault did not include an indexing clause, and while the amount of support was appropriate back in 2013, the amount according to 2022 standards fell well below the SSAG recommendations. As such, it is important to check whether the spousal support order provides for indexing, as its absence may indicate that the amount payable is lagging behind inflation and today’s cost of living.

Third, has the client’s former spouse suffered in any way because of inflation? This question has to do with the position of both spouses in relation to each other, and whether they have both been affected by inflation. In Single, the court did not opt for variation since both spouses had suffered nearly equally because of inflation. However, if the ex-spouse’s income has kept up with inflation and they have otherwise been unscathed by rising prices, then this disproportionality might help show that there has been a material change in circumstances justifying variation.

What matters here is not the effect of inflation generally, but the effect on a spouse’s needs and means.

In these unprecedented times and with a growing unaffordability crisis, recipients of spousal support might have a strong case for obtaining variation. This is important especially for those who are most disproportionately impacted by inflation. As noted by the government of Canada, “spouses and children are at much greater risk of living in poverty if they do not get the financial support that they are owed.”

While spousal support variation may seem like a small solution to the current uncertainties of many Canadians, it can still be a useful tool for those who may really need it.

Deniz Yilmaz is an articling student at Frenkel Tobin LLP with a passion for family law.