Hickey v. Hickey, [1999] 2 S.C.R. 518
Patricia Carolyn Hickey Appellant
v.
Walter Donald Hickey Respondent
Indexed as: Hickey v. Hickey
File No.: 26430.
Hearing and judgment: February 18, 1999.
Reasons delivered: June 10, 1999.
Present: L’Heureux‑Dubé, Gonthier, Cory, Iacobucci, Major, Bastarache and Binnie JJ.
on appeal from the court of appeal for manitoba
Family law -- Support -- Variation of spousal and child support – Objectives of spousal support and variation orders -- Effects of inflation -- Motions judge’s award varied on appeal -- Approach to be taken by appellate courts in reviewing spousal and child support orders – Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.), s. 17(1), (4), (7), (8).
The respondent brought a motion to vary a child support order to delete support for his daughter, who had ceased living with her mother. The appellant consented but applied for an increase in spousal support and child support for the child remaining at home. The motions judge removed support for the daughter, maintained child support at the same amount even though it was now only for one child and increased the amount of spousal support. The Court of Appeal reduced the amount awarded for child support and found the original amount for spousal support to be sufficient. At issue here was the approach to be taken by appellate courts in reviewing spousal and child support orders and the principles for varying those orders. Both parties agreed that the applicable law in this case was the Divorce Act as it stood at the time of the trial judge’s order.
Held: The appeal should be allowed.
Appeal courts should not overturn support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the award is clearly wrong. This standard recognizes that the trial judge can best appreciate the facts and exercise the discretion involved in making support orders, avoids giving parties an incentive to appeal judgments and incur added expenses and promotes finality in family law litigation. An appeal court is not entitled to overturn a support order simply because it would have made a different decision or balanced the factors differently.
Before varying support, the court must satisfy itself that there has been a change as set out in s. 17(4) of the Act. The change must be material, and not trivial or insignificant. If the threshold is met, the court must then consider the factors for determining what will be contained in the variation order. In the case of child support, increased means of the payor spouse, inflation and the increased needs of a child as he or she grows older constitute a material change and justify an upward variation of the amount of support.
In making or varying spousal support orders, the exercise of judicial discretion must be guided by all four objectives set out in the Divorce Act. These objectives reflect the principle that the economic consequences of marriage and of the separation and divorce should be equitably shared between the parties. No single model of spousal support is imposed. Inflation constitutes a material change justifying a variation in spousal support. An upward adjustment to compensate for an increase in the cost of living accords with the objectives of variation orders set out in s. 17(7) of the Act. Therefore, there was no error in the motions judge’s reasons.
Cases Cited
Referred to: Harrington v. Harrington (1981), 33 O.R. (2d) 150; Pelech v. Pelech, [1987] 1 S.C.R. 801; Moge v. Moge, [1992] 3 S.C.R. 813; Willick v. Willick, [1994] 3 S.C.R. 670; Walker v. Walker (1992), 12 B.C.A.C. 137; Bracklow v. Bracklow, [1999] 1 S.C.R. 420; Ross v. Ross (1995), 168 N.B.R. (2d) 147; Winsor v. Winsor (1992), 8 O.R. (3d) 433; France v. France (1987), 44 Man. R. (2d) 238; Jayatilaka v. Roussel (1991), 174 N.B.R. (2d) 204.
Statutes and Regulations Cited
Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.), s. 17(1)(a), (4), (7), (8).
Authors Cited
Payne, Julien D. Payne on Divorce, 4th ed. Scarborough, Ont.: Carswell, 1996.
APPEAL from a judgment of the Manitoba Court of Appeal (1997), 123 Man. R. (2d) 139, 159 W.A.C. 139, 32 R.F.L. (4th) 193, [1997] M.J. No. 536 (QL), allowing an appeal from a judgment of Kennedy J. varying an order for child and spousal support. Appeal allowed.
Randall A. Horton, for the appellant.
Leonard Levencrown, for the respondent.
The judgment of the Court was delivered by
//L’Heureux-Dubé J.//
1 L’Heureux-Dubé J. – This appeal addresses the approach to be taken by appellate courts in reviewing spousal support and child support orders made at trial, and the principles of variation of spousal and child support orders. At the conclusion of the oral hearing, the appeal was allowed from the Bench, with reasons to follow. These are those reasons.
I. Factual Background
2 Patricia Hickey and Walter Hickey were married in December of 1971. They had two children: Susan, born in 1977, and Walter, born in 1980. They separated in April of 1986, and entered into a separation agreement in July of that year. Under the agreement, the appellant gained sole custody of the two children of the marriage. The separation agreement provided for spousal support in the amount of $1,000 per month, and child support in the amount of $750 per month per child. It also divided the assets of the parties between them, and each party received over $250,000 worth of assets. The assets of both parties have significantly increased in value since that time. The separation agreement contained a provision permitting either party to apply for variation in the event of a material change in circumstances affecting, inter alia, the needs of the children, the financial needs of either the husband or the wife, or the financial resources of either the husband or the wife. The parties divorced on January 12, 1987, and the amounts of spousal support and child support, among other aspects of the agreement, were incorporated into the terms of an order for corollary relief. This case was consequently governed by the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.).
3 Susan ceased living with her mother in March of 1996. At that time, the respondent brought a motion to vary the order to delete support for Susan. The appellant consented to the removal of Susan from the support order, but applied for an increase in spousal support, and in the amount of child support for Walter. This motion was heard before Kennedy J., who maintained child support at $1,500 per month, though the amount was now only for Walter, and raised the amount of spousal support to $1,300 per month.
4 Before the marriage, the appellant worked as a legal secretary, and continued to work in that occupation until shortly before becoming pregnant with Susan. From that point on, the parties agreed that the appellant should remain at home to care for the children and the household during the marriage. The respondent developed and managed the parties’ business, Polar Bear Rubber Ltd., which was quite successful both during and after the marriage. In the separation agreement, the respondent received all the shares in this company.
5 After the parties’ separation, the appellant worked as a legal secretary, and then returned to university, where she trained as a nutritionist. She has attempted to operate a small business in this field, but has earned a relatively small income from it. The appellant’s income is slightly lower than it was in 1987. In 1995, she earned $33,342, of which $30,000 comprised spousal and child support. The respondent’s income has more than doubled since the time of separation, when he earned approximately $100,000. In 1995, he earned $218,997.34. The motions judge found that, overall, the financial resources of both parties had increased since the time of the separation agreement, although the respondent’s position had increased disproportionately.
II. Relevant Statutory Provisions
6 Divorce Act, R.S.C., 1985. c. 3 (2nd Supp.):
17. (1) A court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively,
(a) a support order or any provision thereof on application by either or both former spouses; . . .
. . .
(4) Before the court makes a variation order in respect of a support order, the court shall satisfy itself that there has been a change in the condition, means, needs or other circumstances of either former spouse or of any child of the marriage for whom support is or was sought occurring since the making of the support order or the last variation order made in respect of that order, as the case may be, and, in making the variation order, the court shall take into consideration that change.
. . .
(7) A variation order varying a support order that provides for the support of a former spouse should
(a) recognize any economic advantages or disadvantages to the former spouses arising from the marriage or its breakdown;
(b) apportion between the former spouses any financial consequences arising from the care of any child of the marriage over and above the obligation apportioned between the former spouses pursuant to subsection (8);
(c) relieve any economic hardship of the former spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time.
(8) A variation order varying a support order that provides for the support of a child of the marriage should
(a) recognize that the former spouses have a joint financial obligation to maintain the child; and
(b) apportion that obligation between the former spouses according to their relative abilities to contribute to the performance of the obligation.
III. Judgments
A. Manitoba Court of Queen’s Bench, Family Division (unreported)
7 Kennedy J. delivered oral reasons on the motion to vary. He noted that there was an equal division of assets between the parties at the time of separation, but that he also had to take account of the post-marriage financial successes of the parties. He also emphasized that these increases in means were not the only factor affecting changes in the support orders. He noted that both parties were relatively well off, and that both had improved their financial position since separation, though not in the same proportion. Kennedy J. stated that the parties had settled the relevant issues by making a separation agreement, and that he respected the integrity of it and did not interfere with it lightly. He held that he was satisfied that there was a change in circumstances, noting that Susan had moved out of the home and no longer fell under the definition of “child of the marriage”, and that the cost of living had increased. It was ordered that the total amount of child support should remain at $1,500 per month, though Susan was dropped from the order and support for Walter was increased from $750 per month to $1,500 per month. He held that this was because the amount had not been changed throughout the life of the agreement, and children’s needs increase as they get older. He also emphasized that the child should be entitled to share in the increase of his father’s income. He noted that since the government’s child support guidelines were not in effect at the time, he would not comment on them or apply them. With respect to spousal support, he found that the increase in the cost of living also constituted a change in circumstances, and increased the spousal support payable from $1,000 to $1,300 per month. He declined to place a termination date on spousal support. Mr. Hickey appealed this decision to the Manitoba Court of Appeal.
B. Manitoba Court of Appeal (1997), 123 Man. R. (2d) 139
8 The reasons of the panel consisting of himself, Philp and Monnin JJ.A. were delivered by Huband J.A. He observed that although it was reasonable for the wife to seek an increase based upon inflation and the fact that the husband’s income had increased, Kennedy J.’s order doubling the amount of child support was a “reflex reaction”. Holding that inflation was less than 100%, and that there were no other reasons to increase support, maintenance for Walter was set at $900 per month. He noted that it was the court’s view that changes in relation to taxation of child support should have no effect because the order of the court was retroactive to the date of Kennedy J.’s order, which predated the changes in income tax legislation. Huband J.A. also held that there was no justification for the increase in spousal support. He found that Patricia Hickey was provided with an “equitable share” of the parties’ assets, and that they had increased in value since the date of separation. The court emphasized, at p. 141, that “[s]he is of an age where she is capable of earning an income, and she is equipped to do so by training and education.” Huband J.A. concluded that in the court’s view the original amount of spousal support remained sufficient. For these reasons, the appeal was allowed, the motions judge’s order of child support was reduced to $900 per month, and the amount of spousal support was restored to $1,000 per month, both retroactive to the date of the variation order.
IV. Issues
9 Two issues must be decided on this appeal:
(1) Did the Manitoba Court of Appeal err in reducing the quantum of child support payable from $1,500 per month to $900 per month?
(2) Did the Manitoba Court of Appeal err in reducing the quantum of spousal support payable from $1,300 per month to $1,000 per month?
V. Analysis
A. The Approach by a Court of Appeal to the Review of Support Orders
10 When family law legislation gives judges the power to decide on support obligations based on certain objectives, values, factors, and criteria, determining whether support will be awarded or varied, and if so, the amount of the order, involves the exercise of considerable discretion by trial judges. They must balance the objectives and factors set out in the Divorce Act or in provincial support statutes with an appreciation of the particular facts of the case. It is a difficult but important determination, which is critical to the lives of the parties and to their children. Because of its fact-based and discretionary nature, trial judges must be given considerable deference by appellate courts when such decisions are reviewed.
11 Our Court has often emphasized the rule that appeal courts should not overturn support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the award is clearly wrong. These principles were stated by Morden J.A. of the Ontario Court of Appeal in Harrington v. Harrington (1981), 33 O.R. (2d) 150, at p. 154, and approved by the majority of this Court in Pelech v. Pelech, [1987] 1 S.C.R. 801, per Wilson J.; in Moge v. Moge, [1992] 3 S.C.R. 813, per L’Heureux-Dubé J.; and in Willick v. Willick, [1994] 3 S.C.R. 670, at p. 691, per Sopinka J., and at pp. 743-44, per L’Heureux-Dubé J.
12 There are strong reasons for the significant deference that must be given to trial judges in relation to support orders. This standard of appellate review recognizes that the discretion involved in making a support order is best exercised by the judge who has heard the parties directly. It avoids giving parties an incentive to appeal judgments and incur added expenses in the hope that the appeal court will have a different appreciation of the relevant factors and evidence. This approach promotes finality in family law litigation and recognizes the importance of the appreciation of the facts by the trial judge. Though an appeal court must intervene when there is a material error, a serious misapprehension of the evidence, or an error in law, it is not entitled to overturn a support order simply because it would have made a different decision or balanced the factors differently.
13 Considering this standard of review, I turn now to the issues of child support and spousal support. Both parties have agreed that the applicable law in this case is the Divorce Act as it stood at the time of Kennedy J.’s order, and I will proceed on that basis.
B. Child Support
14 The principles for the variation of child support orders were set out by this Court in Willick, supra. Section 17(4) requires, as a threshold before varying the amount of child support, that the court satisfy itself that there has been a change in the condition, means, needs, or other circumstances of either spouse or of any child of the marriage. This change must be material, and not trivial or insignificant. Separation agreements are one of the applicable factors to be considered in making the order, although not determinative. (In this case, the separation agreement between the Hickeys also explicitly incorporated the principle that a change in the parties’ means or needs would justify a re-evaluation of the amount of support.) If the threshold is met, the court must then consider the factors reflected in s. 17(8) in determining what will be contained in the variation order.
15 At the outset, the motions judge held that the threshold for variation had been met, noting in particular the fact that Susan was no longer a child of the marriage, and that the cost of living had increased. The Court of Appeal did not take issue with this finding.
16 On the merits, the motions judge deleted Susan from the order, but increased the amount payable for Walter from $750 to $1,500 per month. The total amount of child support thus remained the same. The variation order was based on the effects of inflation, the improvement in the financial resources of the parents, and the fact that the cost of raising children generally increases as they become older.
17 The factors considered by the motions judge do not demonstrate an error of law. Increased means of the payor spouse constitutes a material change justifying an upward variation of the amount of support: see Willick, supra, at p. 691, per Sopinka J., and at pp. 738-39, per L’Heureux-Dubé J. In this case, the means of the respondent increased significantly in the time between the original order and the application for variation. It was appropriate for the motions judge to reflect this in an increased support order.
18 It was also appropriate for the motions judge to take into account Walter’s increased needs caused by the effects of inflation and the fact that he was 10 years older. As I wrote in Willick, supra, at pp. 739-40:
To this end, a court may take judicial notice of the fact that it costs more to support children as they grow older. When this fact becomes compounded by the effect of inflation, it may constitute a sufficient change: James v. James (1992), 41 R.F.L. (3d) 70 (B.C.C.A.) and Marshall v. Marshall (1992), 43 R.F.L. (3d) 303 (Man. C.A.). Professor Diane Pask also takes the view that inflation must be provided for in child support orders ([(1994), 10 C.F.L.Q. 33], at p. 89).
In taking into account these factors, therefore, the motions judge applied the correct principles of law. There was no error in the fact that he found, based upon the increased means of the payor spouse, the increased cost of raising children as they become older, and the increases caused by the effects of inflation, that an increase in support for the younger child from $750 to $1,500 was justified. Rather, his order reflected the objectives of s. 17(8).
19 The Court of Appeal held that the amount of the increase was not warranted, qualifying it as a “reflex reaction”, and reducing it to $900. With respect, however, the Court of Appeal’s approach does not reflect the standard of appellate review discussed above. Unless it could identify an error in law or misapprehension of the evidence by the motions judge, or had serious reasons to find that the amount of support awarded was clearly wrong, it should not have intervened. There was nothing in Kennedy J.’s award which indicated any error.
C. Spousal Support
20 On an application for variation of an award of spousal support, the court must first find, under s. 17(4), that there has been a material change in the conditions, means, needs, or circumstances of either spouse (see Moge, supra, at pp. 875-76, and Walker v. Walker (1992), 12 B.C.A.C. 137, at pp. 141-42) and in making the order, the court must take into consideration that change. As with the variation of child support orders, this change must be material, and cannot be trivial or insignificant. The factors enumerated give the court considerable discretion in determining whether a variation order is justified: see J. Payne, Payne on Divorce (4th ed. 1996), at p. 321. Once this threshold is passed, the court must consider the four objectives of spousal support enumerated in s. 17(7) of the Divorce Act.
21 The objectives set out in s. 17(7) parallel those set out in s. 15.2(6), recently considered by this Court in Bracklow v. Bracklow, [1999] 1 S.C.R. 420, per McLachlin J. These objectives set out the principles and values that must be considered by judges in exercising their discretion when making or revising support orders: see Moge, supra, at pp. 866-67, and Bracklow, supra, at para. 35. As noted by Payne, supra, at p. 296, they reflect the principle that the economic consequences of the marriage and of the separation and divorce should be equitably shared between the former spouses.
22 Section 17(7)(a) requires the court to take into account economic advantages and disadvantages arising from the marriage or its breakdown. This, in particular, recognizes the importance, when deciding on spousal support or variation orders, of compensating former spouses for advantages gained and disadvantages suffered as a result of the marriage itself and the decisions the parties made and roles they played within it: see Moge, supra. Section 17(7)(c) outlines the equally important objective of relieving economic hardship arising from the breakdown of the marriage: see Moge, supra, at p. 865, and Bracklow, supra, at paras. 36 and 41. Considering this objective includes examining the change to the economic situation of the parties caused by the separation, taking into account current needs and means and all other relevant circumstances of the parties: see Moge, supra, at pp. 865-66. The second and fourth objectives -- those of apportioning child rearing costs over and above the extent reflected in the child support order, and promoting economic self-sufficiency to the extent practicable -- must also be taken into account in determining the appropriate support or variation order. As was held in Moge, supra, at pp. 866-67:
The exercise of judicial discretion in ordering support requires an examination of all four objectives set out in the Act in order to achieve equitable sharing of the economic consequences of marriage or marriage breakdown. This implies a broad approach with a view to recognizing and incorporating any significant features of the marriage or its termination which adversely affect the economic prospects of the disadvantaged spouse.
23 This Court emphasized in Bracklow, supra, that neither the Act itself, nor the principles set out in Moge impose a single model for determining or varying spousal support. As stated by McLachlin J., at para. 32, courts must:
. . . consider not only compensatory factors, but the “needs” and “means” of the parties. It is not a question of either one model or the other. It is rather a matter of applying the relevant factors and striking the balance that best achieves justice in the particular case before the court. [Emphasis in original.]
As Bastarache J.A. (as he then was) stressed in Ross v. Ross (1995), 168 N.B.R. (2d) 147 (C.A.), at p. 156, cited with approval in Bracklow, supra, at para. 36, “in cases where it is not possible to determine the extent of the economic loss of the disadvantaged spouse . . . the court will consider need and standard of living as the primary criteria, together with the ability to pay of the other party.”
24 The objectives that guide the exercise of judicial discretion set out in s. 17(7), therefore, recognize the varying ends that an order for spousal support should serve, taking into account the nature of the marriage, its economic consequences, the consequences of its breakdown, and the situations of the parties before the court. In making an order that reflects them, a trial judge must consider all relevant facts and applicable factors.
25 Turning to the facts of the case at bar, the motions judge concluded that there was a material change in circumstances based on the increase in the cost of living, and on that basis increased the amount of spousal support from $1,000 to $1,300. The Court of Appeal concluded that there was “no justification” for this increase.
26 It has been held by several appeal courts that inflation may constitute a material change justifying a variation in spousal support pursuant to s. 17(4): see, for example, Winsor v. Winsor (1992), 8 O.R. (3d) 433 (C.A.), at p. 434; France v. France (1987), 44 Man. R. (2d) 238 (C.A.); and Jayatilaka v. Roussel (1991), 174 N.B.R. (2d) 204 (C.A.). I agree that the decreased purchasing power that occurs because of the increased costs of living is a material change that affects the real value of the payments received and therefore the needs of the payee spouse. An upward adjustment for an increase in the cost of living also accords with the objectives of variation orders set out in s. 17(7). The needs of the disadvantaged spouse occasioned by the marriage breakdown will frequently increase because of the increased cost of living over time, and so, often, will the means of the payor spouse, as they did here. Similarly, continuing to compensate a spouse adequately for disadvantages which arise because of the marriage itself may justify an increase when the value of the amount of support awarded has declined over time in real terms. In the case at bar, the appellant suffered financial disadvantage from the marriage, in particular as a result of the parties’ decision that she would leave the workforce to care for the children. There was no error in the decision of the motions judge to adjust for inflation the amount of support, which continued, in part, to compensate for that disadvantage.
27 Therefore, I conclude that the reasons of the motions judge properly reflected the objectives set out in s. 17(7), and that he took account of the material changes in circumstances, while also considering the existence of the separation agreement and its terms as a relevant factor. His reasons indicate no material error or serious misapprehension of the evidence, and the quantum of the variation is not clearly wrong. I note, in particular, that the consumer price index in Manitoba rose by 38.1% between 1986 and 1996, slightly more than the amount of the adjustment.
28 The Court of Appeal, with respect, should have emphasized the standard of review discussed above and evaluated the motions judge’s ruling in light of the objectives of variation orders, the facts of the marriage and the situation of the parties subsequent to its breakdown, and the material changes in circumstances, rather than substituting its opinion that the original amount of spousal support remained “entirely sufficient”. Indeed, from the reasoning of the Court of Appeal, it appears that its analysis may have given primacy to factor (d), self-sufficiency. As this Court held in Moge, supra, and Bracklow, supra, promoting self-sufficiency, to the extent practicable, is only one of the four objectives to be taken into account in spousal support orders.
VI. Disposition
29 For these reasons, at the oral hearing the appeal was allowed, with costs throughout, and the order of Kennedy J. was restored.
Appeal allowed with costs.
Solicitors for the appellant: Monk, Goodwin, Winnipeg.
Solicitors for the respondent: Smordin, Pauls, Winnipeg.