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Variation —  L.M.P. v. L.S. Revisited —  Section 17 of the Divorce Act Explained

By: Philip Epstein

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Droit de la famille  — 132380 [G.P. v. M.M], 2013 CarswellQue 14061, (C.A. Que.)

This is an important decision of the Quebec Court of Appeal penned by Justice Nicholas Kasirer. There has been some delay in reporting and commenting on this case because we wanted to be sure that we had an accurate translation from the original French judgment. This is a very careful and erudite analysis of the variation provisions of the Divorce Act and how Droit de la famille - 091889, 6 R.F.L. (7th) 1 (S.C.C.) [L.M.P. v. L.S.], impacts upon these kinds of applications and makes crystal clear how the majority judgment in L.M.P. will affect the outcome of these cases.
This is all about the court's powers when an agreement is incorporated into a court order and then there is a variation application. More importantly, it requires the courts below to apply the majority judgment in L.M.P. v. L.S. and not a Miglin analysis.

The wife appeals from an order below varying a support order, which support order arose as a result of an agreement between the parties. As Justice Kasirer notes at the outset that the idea of varying a court order arising from an agreement raises the "thorny problem" of the treatment reserved for separation agreements under the regime of section 17 of the Divorce Act.

That is particularly so when the parties in the agreement, which is subsequently ratified by a court, set out in the agreement the parameters for variations in the future. It is to be remembered that even where an agreement is incorporated into an order which includes a term providing that it is final, the court's jurisdiction under section 17 cannot be ousted. See L.M.P. v. L.S. at paragraph 41. There is a difference, however, between trying to oust the court's jurisdiction as opposed to setting parameters for what constitutes a material change. That is what this case is about.
There are convoluted facts in play here because the parties entered into more than one agreement. Thus I am going to try to simplify what Justice Kasirer and his unanimous panel had to say.

The trial judge began his analysis by looking at Miglin v. Miglin, 34 R.F.L. (5th) 255 (S.C.C.), L.M.P. and Droit de la famille - 09668, 6 R.F.L. (7th) 68 (S.C.C.) [R.P. v. R.C.], [2011] 3 S.C.R. 819. He first asked himself whether material change had occurred since the support order was issued. But once a material change was established, he then noted that the court must re-assess the case taking into consideration the criteria set forth in section 17. "He noted that it must be demonstrated that the situation is significantly different from that envisioned by the parties at the time the agreement was signed." The trial judge found that there had been a material change because the husband's income dropped while the wife's income increased and stabilized. Thus he varied the support.

The trial judge did not take into account that the parties in their agreement specifically provided that the wife's income would not be a factor in any application to vary. That is, the parties themselves set out certain parameters about what would not constitute a material change including the factor that the wife's income would not be considered.
Thus the wife agreed that the trial judge erred and made three significant errors in law. The first was that the trial judge ignored, in his consideration of whether there was a material change, the clause that provided that the wife's income was not to be taken into account. Secondly, the trial judge suspended the support retroactively to a date prior to the judgment of the court which had ratified the previous agreement and, thirdly, the trial judge erred when he failed to ascertain whether the material change had "some degree of continuity."

Justice Kasirer is at pains to do a very careful review of the majority judgment in L.M.P. v. R.P. He noted:
[73] In L.M.P., the majority of the Court noted that, when an agreement is incorporated into a support order, as is the case at bar, an analysis framework must be adopted that is proper to section 17 and differs from that proposed in Miglin for the initial order under article 15.2. The Miglin analysis framework is also inappropriate here since Miglin is supposed to deal with definitive settlements.

The Supreme Court explained a two-step approach to resolving a motion formulated under section 17 of the Act. Firstly the threshold for variation as set forth in the section must be met. Once the threshold for variation is met the court decides on the variation to be made to the order on the basis of that change. The court specifically does not wipe out the order and start all over again de novo. They adjust the order to reflect the change. That, since L.M.P. has been decided, has been significantly overlooked by the bench and bar across Canada. It has all been too often assumed that once there is a material change, one can treat the order as at an end and begin again. That is not so when the order arises as a result of an agreement between the parties. While the minority in L.M.P. may have a different view it is the majority view that governs here and, thus, there is an essential difference between varying an order that arises from a contested hearing and an order that arises from a signed agreement of the parties. As Justice Kasirer noted:
[81[ It is not a matter of an appeal from the support order in effect or a de novo trial. On that point, the Supreme Court, in L.M.P., was adamant: "(a) court should limit itself by making the variation which is appropriate in light of the change. The task should not be approached as if it were an initial application for support under s. 15.2 of the Divorce Act.
Justice Kasirer found that the trial judge erred in adopting the analysis framework developed in Miglin but which was formally rejected in L.M.P. In L.M.P. the majority of the Court noted that:

The approach developed in Miglin, then, was responsive to the specific statutory directions of section 15.2 of the Divorce Act and should not be imported into the analysis under section 17.
To be clear, there are three essential elements under the test under section 17 (4.1); the foreseeable nature of the change, the date as of which the analysis must be conducted and the requirement that there be some continuity in the change over time in order to be material. Justice Kasirer finds that the trial judge failed to consider the relevant clauses of the agreement that the parties entered into but that was subsequently turned into a consent order. In particular the wife's increase in income and her self-sufficiency were not to be factors and the trial judge failed to take that into consideration. Since those clauses in the agreement became part of the court order for support they essentially were ratified by the court and constitute guidelines by which the court must be governed in any future variation application. As the majority of the Court noted in L.M.P. the parties can provide expressly that a future event will or will not constitute a material change. Lawyers now drafting separation agreements that contain a material change clause or a variation clause usually insert guidelines into the material change clause both to make it clear that the change need not be foreseeable and often list the parameters that will or will not constitute a material change such as remarriage, cohabitation or retirement. As L.M.P. notes the court must consider these parameters when determining whether there has been a variation in the future. See in particular paragraph 39 of L.M.P.

Justice Kasirer finds that the agreement not to consider the wife's economic position was sufficiently precise and foreseeable "in keeping with the teachings of L.M.P. to give effect to the intent manifested by the parties in the agreement ratified by the order".

We should of course note the parties cannot completely pre-empt the court's power to vary an order but in this case the parties did not agree to a final order seeking to oust the judicial power to vary the agreement. Rather they set guidelines for the exercise of that power and that appears to be permitted in a negotiated agreement with which the court will not interfere. The clause in issue in this case about the wife's income was not a general clause as discussed in paragraph 41 of L.M.P. but rather a specific term and was included by the parties deliberately as part of the agreement and a basis upon which the settlement was constructed.

Justice Kasirer also identified the error made by the trial judge for the date chosen for when the material change allegedly occurred. In L.M.P. the Supreme Court of Canada confirmed that the relevant date for the assessment of the parties' situation for their variation of an order is the date of the order and not the date of the agreement that gave rise to the order. That is an important distinction of which counsel must make careful note.

Finally, Justice Kasirer found that there was no quality of continuity of the change in the husband's financial circumstances as there was evidence before the Court which had demonstrated that while his income might have dipped it was on the path back up. Justice Kasirer notes that L.M.P. makes it clear that a setback in the financial situation of a spouse must have a degree of continuity in order to meet the threshold for variation of an order. The husband's income decreased in 2010 but increased in 2011 and 2012 and, although not back to its former state, was significantly more than the amount used by the judge to measure a variation.

There were also factual errors made by the trial judge below but even absent those factual errors the husband was not going to hold onto his judgment.

This case explains carefully the majority judgment in L.M.P. contrasted with the analysis used in Miglin to set aside support settlements that arise in agreements. This case makes it clear that one must not confuse the two and that a Miglin analysis is not appropriate when a separation agreement has been turned into a court order. This should give lawyers some pause in considering how they want to ultimately settle their case. Should the divorce order be silent as to corollary relief so that a Miglin analysis will apply in the course of a subsequent support application under section 15.2 of the Divorce Act, or should the support arrangements be included in the court order giving rise to a L.M.P. analysis instead? Sometimes a difficult choice.

What has often been overlooked is the comment by Justice Kasirer that if the threshold is met this does not result in a de novo trial but rather adjusting the support to the changed circumstances. That may be a distinction without a difference in many, but nevertheless it is something for all of us to think about. This is particularly so when a de novo review could reconsider entitlement. I commend this case to you.

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