



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Powell v. Levesque,









2014 BCCA 33




Date: 20140129

Docket: CA039041

Between:

Wendy Elaine
Powell

Respondent

(Claimant)

And

Helene Mary Alice
Levesque

Appellant

(Respondent)

Corrected
Judgment: The heading on the front page
was corrected on January 30, 2014.




Before:



The Honourable Madam Justice D. Smith

The Honourable Madam Justice Bennett

The Honourable Mr. Justice Willcock




On appeal from:  An
order of the Supreme Court of British Columbia, dated
April 20, 2011 (
Powell v. Levesque
, Victoria Docket No. 99-3109).




Counsel for the Appellant:



N.J.W. Reid





Counsel for the Respondent:



R.L. Taylor





Place and Date of Hearing:



Victoria, British
  Columbia

December 3, 2013





Place and Date of Judgment:



Vancouver, British Columbia

January 29, 2014









Written Reasons by:





The Honourable Madam Justice D. Smith





Concurred in by:





The Honourable Madam Justice Bennett





The Honourable Mr. Justice Willcock








Summary:

The appellant and respondent
separated after an eight-year marriage-like relationship. They executed

a
separation agreement that divided their assets, allocated their debts, and
provided that the appellant would pay the respondent spousal support on terms.
Subsequently the respondent commenced an action to vary the agreed upon support
and for a share of the appellants Canadian Armed Forces pension. The parties
resolved the action in a consent order that expressly set aside the terms of
the separation agreement and provided for the respondents spousal support and
a division of the appellants pension. After twelve years of paying spousal
support and upon her retirement from the military after 26 years of service, the
appellant applied to vary her support obligation. The chambers judge dismissed
the application on the basis that the appellant had failed to establish a
material change in circumstances. Appeal allowed. The appellants retirement
from the military with its attendant reduction in income was a material change
of circumstances. Her earning capacity was also diminished as a result of
health issues. Although the respondent had an ongoing need for support as a
result of her disabilities and serious health issues, the appropriate order,
after a consideration of SSAG, was the termination of the appellants spousal
support obligation.

Reasons for Judgment of the Honourable
Madam Justice D. Smith:

A.
Overview

[1]

This appeal revisits the threshold issue of when a change of circumstances
is material for variation of a spousal support order under s. 96(1) of the
Family Relations Act,
R.S.B.C. 1996, c. 128 [
FRA
], and, if established,
what is an appropriate variation of the previous order. It should be noted that
in this case the variation application was determined before the March 18,
2013 implementation of the
Family Law Act,
S.B.C. 2011, c. 25 and
therefore was governed by the provisions of the
FRA.

B.
Background

[2]

The appellant and respondent lived together in a marriage-like
relationship for eight years, between June 1990 and June 1998. At the date of
separation the appellant was 34 and the respondent was 43. During their
relationship, the appellant was a member of the Canadian Armed Forces (CAF) and
worked as a steward in the navy. The respondent is disabled and has a number of
medical problems which render her unemployable.

[3]

In June 1998, following the breakdown of their relationship, the parties
executed a separation agreement in which they agreed to: (i) a division of
their assets; (ii) the repayment of debts totalling $64,537.80 by the
appellant; (iii) the payment of monthly spousal support of $500 by the
appellant to the respondent, with an annual cost of living (COLA) increase of
four percent to commence on the 1
st
day of the month after the debts
of $64,537.80 were fully paid; (iv) the continuation of the appellants spousal
support obligation until such time as the respondent died, married or commenced
cohabitation with another in a marriage-like relationship; and (v) a
prohibition to the respondent from seeking a settlement with respect to [the
appellants] pension plan for as long as [the appellant] provides monthly
support payments  or if [the respondents] situation changes.

[4]

On July 6, 1999, the respondent commenced an action in the Supreme
Court of British Columbia against the appellant seeking, among other things, a
variation of the agreed upon spousal support and a share of the appellants military
pension. The action resulted in a final order, by consent, granted on
July 23, 2001 (the Consent Order). By the date of the Consent Order the
appellant had made substantial payments on the debts she was obliged to pay under
the agreement and had paid contractual spousal support for three years.

[5]

The first paragraph of the Consent Order provided:

THIS COURT ORDERS:

1.         That the separation agreement
entered into by the parties on June 14, 1998, is hereby set aside and is
replaced in [its] entirety by the terms as follow herein

[6]

In particular, the Consent Order also provided for a division of the
appellants pension:

9.         That the plaintiff is entitled
to one half of the [Defendants] pension available through her employment with
the Department of National Defence for the period during which the parties
cohabited, that being from June 15, 1990 to June 14, 1998 and the
Defendant shall execute and deliver such further assurances, acts, deeds,
authorities and all such further instruments as may be reasonably required for
the purposes of carrying out and giving full effect to the division.

[7]

The remaining joint debts and certain other personal property were
allocated to each of the parties, the appellant was required to maintain the
respondent as a beneficiary on the term life insurance policy of $80,000 that
was available to her through her CAF employment, and the appellant was ordered
to pay the respondent the sum of $8,000 forthwith. The appellant complied with
all of these terms.

[8]

In regard to spousal support, the Consent Order required the appellant
to pay spousal support on the following terms:

7.         That
the Defendant shall pay to the Plaintiff a monthly sum of spousal support as
set out herein:

a)         Commencing
January 1, 2002 and continuing on the first day of each and every month
thereafter the amount of $500.00; and

b)         Upon complete payment of the debts
as set out in Paragraph 3 herein [$64,537.80], the spousal support shall be
varied to include a cost of living increase of four percent per year calculated
from the date of this Order.

[9]

Several years after the Consent Order the appellants circumstances
changed.

The
appellants circumstances

[10]

In August 2008, after 26 years of service, the appellant, at age 44, retired
from the military on a full pension. She had completed her contracted 25 years
of service and had begun to experience health issues. In 2003 she required
brain surgery. Subsequently she sustained a knee injury while in active service
in the Golan Heights. The injury led to symptoms of stiffness, cramping and
swelling, which were aggravated by running (to the point of becoming swollen
and causing her to limp). She was referred to physiotherapy but was unable to
continue with that program upon being posted to sea. This in turn caused her symptoms
from the knee injury to reoccur. She now has degenerative arthritis in the knee
joint and has been advised that surgery is unlikely to provide her any benefit.
She also suffers from iron-deficiency anemia.

[11]

Around this time, the appellant had a desire to be closer to her father
who resided in Ontario and was ill. Following her retirement, she moved to
Ontario where she obtained part-time employment with Tim Hortons.

[12]

In 2006 the appellants military pension was divided in accordance with
the terms of the Consent Order. The division was effected by way of a transfer to
the respondent of a lump sum of $44,562.99 into a locked-in RRSP. The
consequence of the division was a reduction in the appellants gross monthly
pension benefit of $237.57.

[13]

Immediately before her retirement, the appellant had a gross annual
employment income of $66,000 (or $5,500 monthly). Following retirement, her
annual income included her divided pension benefit (at a gross monthly amount
of $2,577 and net amount of $1,456.56) and some part-time employment. The chambers
judge found the appellants total annual income to be $52,000, which was comprised
of annual pension income of $29,000 and annual employment income of $23,000 (in
2010). He also found the appellant had $49,000 in an RRSP (from her military
severance) and owed about $28,000 in debt.

The respondents
circumstances

[14]

Throughout the relationship, and after its breakdown, the respondent has
experienced a number of health issues. At the hearing of the variation
application she tendered evidence that her health was deteriorating and her
prognosis was guarded. She now also suffers from an ambulatory disability.

[15]

In 2006 the respondent cashed in her locked-in RRSP from the pension
division. Those monies have since been spent. She has no assets to speak of and
has debts of $25,000. Her monthly income (as of January 2011) was a combination
of Canada Pension disability benefits ($936.60), social assistance ($169.82)
and spousal support ($657.97) totalling $1,764.39. The four percent annual COLA
provision has increased her monthly support from $500 to $657.97 (as of
December 2010).

[16]

There is no issue that the respondent has a significant need for
support.

C.
The
Judgment

[17]

The chambers judge dismissed the appellants variation application on
the basis that she had failed to establish the threshold issue of a material
change of circumstances. He found that while she had paid spousal support for
12 years, first under the separation agreement and then pursuant to the Consent
Order, the medical reason for her early retirement was not sufficiently compelling
(para. 9). He stated:

[26]      I accept that retirement, while its inevitability
hardly qualifies as unexpected, can constitute a substantial and continuing
change sufficient to entitle a court to vary or rescind a maintenance
obligation.

[27]      The authorities tendered by counsel, when read
together, persuade me that whether retirement does support a variation or
rescission in any case depends upon, to some extent the timing and the reason
for retirement. That is, a person who retires at an age when retirement is
reasonably to be expected, or who must retire early for medical or other
sufficient reasons, may well be in a position to persuade a court that the
change triggered by retirement is substantial, unforeseen and of a continuing
nature, in the language of Proudfoot J.A. in
Carter v. Carter
[(1991),
34 R.F.L. (3d) 1 (B.C.C.A.)]
,
as quoted in
T. v. T.
[
T.(T.L.A.)
v. T.(W.W.)
(1996), 24 R.F.L. (4
th
) 51] at paragraph 34.

[28]      Here, Ms. Levesque retired at a relatively
young age. While her knee condition no doubt made some aspects of her military
employment quite uncomfortable, the evidence falls short of establishing that
her knee condition was sufficiently disabling as to amount to a medically
reasonable explanation for
early retirement
.

[29]      In any event, Ms. Levesque can, and has been,
supplementing her military pension with civilian employment. Again, her knee
condition may make some aspects of employment uncomfortable, and may preclude
other employment completely, that is employment for which she would otherwise
be suited by reason of education, training or experience, however the evidence
falls short of establishing that the work she is doing, I understand at a Tim
Hortons outlet, is the only work available or that she may be unable to
continue such work because of medical concerns.

[Emphasis added.]

[18]

The chambers judge also considered the role of the parties separation agreement
in the variation application, stating:

[32]      It is relevant, in considering whether a material
change has been shown, to bear in mind that the order for which variation or
rescission is sought is one that the parties bargained between them and agreed
to incorporate into a consent order. This is not inconsistent with finding that
the court can vary or rescind, it merely points to the contractual nature of
the provisions now under review as a circumstance to be considered.

[33]      This means, among other
things, what might otherwise seem a generous spousal support obligation, at
least in its duration, should not be reopened because of its generosity, and
that the court should be careful to apply the material change test properly, in
spite of the apparent generosity of the consent order.

[19]

In the result, the judge concluded that [a]llowing for what I have
already said about when retirement of the payor might constitute material
change, I have not been shown that such a change on the evidence in this case
exists.

D.
Issues
on Appeal

[20]

The appellant lists 12 grounds of appeal; however, for the purpose of this
appeal I am satisfied they may be reduced to the following:

1.       Did
the chambers judge err in finding that the appellants retirement from the CAF
did not constitute a material change in circumstances?

2.       Did
the chambers judge err in finding that the appellants reduced income after
retirement did not constitute a material change in circumstances?

3.
      Did the chambers judge err in giving weight to the parties separation
agreement on the variation application?

4.       Did the chambers
judge err in failing to consider the double recovery aspect of the respondents
continued receipt of spousal support at a level based in part on the
appellants divided pension income?

[21]

The appellant further submits that had the chambers judge found the
appellant had established a material change of circumstances, he would have
been guided by the
Spousal Support Advisory Guidelines
(
SSAG
) and
determined that an appropriate variation order would have been to terminate the
appellants spousal support obligation after 12 years.

[22]

I do not propose to address the last ground of appeal as I find it
unnecessary to do so in order to determine this appeal. The appellant also
seeks to adduce fresh evidence in the appeal regarding the effect of her ongoing
and additional health issues on her employability and attendant diminishment in
her financial circumstances. Again, I do not propose to address that
application as I find it unnecessary to the determination of this appeal.

E.
Discussion

[23]

In
L.M.P. v. L.S.,
2011 SCC 64, [2011] 3 S.C.R. 775, a decision
that was rendered after the decision under appeal, the Supreme Court of Canada
reiterated the two-fold test for variation of a support order under the
Divorce
Act,
R.S.C. 1985, c. 3 (2d Supp.) from
Willick v. Willick,
[1994]
3 S.C.R. 670 (for child support orders) and
G.(L.) v. B.(G.),
[1995] 3
S.C.R. 370, (for spousal support orders). The Court stated:

[31]
Willick
described the proper analysis as
requiring a court to determine first, whether the conditions for variation
exist and if they do exist what variation of the existing order ought to be
made in light of the change in circumstances (p. 688). In determining whether
the conditions for variation exist, the court must be satisfied that there has
been a change of circumstance since the making of the prior order or variation.
The onus is on the party seeking a variation to establish such a change.

[32]      That change of
circumstances, the majority of the Court concluded in
Willick,
had to
be a material one, meaning a change that, if known at the time, would likely
have resulted in different terms (p. 688).
G.(L.)
confirmed that this
threshold also applied to spousal support variations.

[24]

The Court added that whether a material change of circumstances has been
demonstrated will depend on the
actual
circumstances of the parties at
the time of the order (para. 34) and in general will require some degree
of continuity, not merely a temporary set of circumstances (para. 35).

[25]

The Court further confirmed that the threshold test for variation is the
same whether or not the previous support order incorporated provisions from an
agreement between the parties. It reiterated (at para. 36) that the question
remains: Has a material change of circumstances occurred since the making of
the order? (See
Willick; G.(L.); Leskun v. Leskun,
2006 SCC 25, [2006] 1
S.C.R. 920.)

[26]

The circumstances in
L.M.P.
involved an application to vary a
spousal support order pursuant to s. 17(1)(a) of the
Divorce Act
.
The issue was whether the separation agreement executed by the parties before
the divorce proceedings was a factor to be considered in determining the former
husbands application to vary the initial spousal support order. The majority
concluded that it was not because s. 17(4.1) did not include agreement
in the list of factors to consider in determining if the threshold test of a
material change in circumstances had been established.

[27]

The Court distinguished the test for variation in s. 17(4.1), which
refers only to whether a change in the condition, means, needs or other
circumstances of either former spouse has occurred, from the test for an
initial order in s. 15.2(4), which requires the court to consider any
order, agreement or arrangement relating to support of either spouse. If an
agreement specifies or defines what type of change will or will not give rise
to variation, courts should attempt to give effect to the parties intention
where those provisions are incorporated into the initial or previous order, as
those provisions are presumed to have met the objectives for spousal support in
s. 15.2(6) (paras. 33, 38-39). The Court further clarified:

[39]       Even significant changes
may not be material for the purposes of s. 17(4.1) if they were
actually
contemplated by the parties by the terms of the order at the time of the order.
The degree of specificity with which the terms of the order provide for a
particular change is evidence of whether the parties or court contemplated the
situation raised on an application for variation, and whether the order was
intended to capture the particular changed circumstances. [Emphasis added.]

[28]

While the variation application in this case was made pursuant to
s. 96(1) of the
FRA,
the relevant provisions of the
FRA
are
similar to those in the
Divorce Act
. In granting an initial order,
s. 89(1) of the
FRA
directs the court to consider, among other
factors, an express or implied agreement between the spouses that one has the
responsibility to support and maintain the other. However, in determining a
variation application, s. 96(1) states that the court must consider
changes in the needs, means, capacities and economic circumstances of each person
affected by the order and make the appropriate change, if any. Thus, in both
enactments there is no provision for the court to consider the terms of the
parties separation agreement on a variation application.

[29]

As to the appropriate order to be made if a material change of
circumstances is established, the court must limit itself to making a variation
order that is justified by that change unless the circumstances require the
rescission, rather than a mere variation of the order (
L.M.P.
at paras. 47,
50).

F.
Application
to this Case

[30]

Cases involving sick or disabled spouses are challenging as the payee
spouse generally has an ongoing if not permanent need for support. However,
need is not the sole criterion for entitlement to ongoing spousal support. Section
96(1) requires the court to consider changes in the needs, means, capacities
and economic circumstances
of each person affected by the order
 sought
to be varied (emphasis added).

(i)       Did
the chambers judge err in finding that the appellants retirement from the CAF
did not constitute a material change in circumstances?

[31]

With respect, in my view the chambers judge erred in finding that the
appellants retirement from the military was not a material change of
circumstances. This error likely occurred due to the judges misapprehension of
the evidence that the appellant had elected to take early retirement when in
fact she had elected to retire after completing 25 years of service. Thereafter,
she had no obligation to continue with her military employment and after 26
years of service was entitled to retire and receive her full pension. By then,
the respondent had also received and spent her proportionate share of the
appellants pension.

[32]

The judges misunderstanding of the basis upon which the appellant decided
to retire is also evident in his remarks (at para. 26) in which he
acknowledged that retirement (as opposed to early retirement) can constitute a
material change in circumstances. The judge further observed that while retirement
in general is inevitable and therefore not unexpected, the date of
actual
retirement is not typically known in advance of its actual occurrence. The date
of the appellants actual retirement was clearly not known to the parties when
they entered into the July 23, 2001 Consent Order.

[33]

In
Ross v. Ross
(1994), 7 R.F.L. (4
th
) 146 (B.C.C.A.),
this Court held (at para. 15) that the law does not require payor spouses to
maintain spousal support at a level that forces them to continue to work after
becoming eligible for full retirement benefits. The appellant in this case,
although only 44 years of age at the time of her retirement, could not be
compelled to remain at that employment after she had completed her 25 years of
service in order to maintain her spousal support obligation under the Consent
Order. Moreover, the appellants increasing physical limitations arising from
her knee condition, which the judge acknowledged no doubt made some aspects of
her military employment quite uncomfortable (para. 28), clearly
influenced her decision to retire despite her attempt to continue with her military
employment for an additional year after she had completed her obligatory
service.

[34]

The evidence did not support the judges finding that the appellant took
early retirement. Nor was there any evidence that the appellant chose to retire
in order to avoid her support obligation or any of her other financial
commitments under the Consent Order, all of which she had met. In my view, her
retirement was a material change in circumstances as the primary source of her
income changed from employment to pension and her level of income decreased
significantly thereafter.

(ii)      Did
the chambers judge err in finding that the appellants reduced income after
retirement did not constitute a material change in circumstances?

[35]

The appellants level of income for the purpose of the variation
application was found by the chambers judge to be $52,000 (being $29,000 pension
income and $23,000 part-time employment income). The trial judge appeared to
conclude (at para. 29) that the appellants earning capacity was greater
than her annual employment income of $23,000 from Tim Hortons. However, the evidentiary
basis for this finding is unclear to me and it would seem that based on this
finding the judge imputed a higher level of income to the appellant that was
never identified or explained.

[36]

The appellants $43,000 decrease in annual employment income was clearly
a material change in circumstances. Even if her annual pension income of
$29,000 is factored into the income analysis, and the double recovery issue and
its exceptions (as discussed in
Boston v. Boston,
2001 SCC 43, [2001] 2
S.C.R. 413 at paras. 61-65) are ignored, the appellants income, after
retirement, decreased by $14,000 (from $66,000 to $52,000). In my view, such a
decrease, in the context of these parties standard of living, was sufficient
to meet the threshold test of a material change in circumstances.

[37]

In summary, the appellants decision to retire after 26 years, having completed
25 years of service in the CAF, and in the face of increasing health issues,
was not in my view unreasonable. This resulted in a decrease in her level of
employment income of $43,000 and in her total income (after her pension benefit
had been divided with the respondent) of $14,000. There was no evidence to
support a finding that she had a greater earning capacity than what she was
able to earn at Tim Hortons. In my view, the appellant met the threshold test
of a material change in circumstances for variation of the spousal support provisions
of the Consent Order.

(iii)      Did
the chambers judge err in giving weight to the parties separation agreement on
the variation application?

[38]

L.M.P.
limits the consideration to be given to a separation
agreement on a variation application. While the parties separation agreement was
a relevant factor in granting the Consent Order, the chambers judge in my view
erred in giving it any further weight in determining the variation application.
It is unnecessary to consider a separation agreement in a variation application,
as the agreement is presumed to have been fully considered when the initial
order was made.

[39]

In this case, there was a compelling reason for giving no weight to the
parties separation agreement: the parties had expressly agreed in the Consent
Order that the provisions of the separation agreement were to be set aside and
replaced by the provisions of the Consent Order.

[40]

In these circumstances, I am of the view the judge erred in considering
the parties separation agreement in determining whether the appellant had
established a material change of circumstances.

(iv)     What
is an appropriate variation order?

[41]

The respondents entitlement to spousal support is based on need. During
the parties relationship, the appellant supported the respondent and the
respondent became financially dependent upon that support. Following the
parties separation, the respondents contractual support and the court-ordered
support in the Consent Order was necessary in order to assist the respondent in
addressing the economic hardship that she experienced as a result of the
breakdown of the relationship. The issue, then, is whether, after 12 years, and
in face of the appellants material change in circumstances and the
respondents continuing need, the appellant should be required to pay some
amount of spousal support.

[42]

The quantum of support includes both amount and duration. In considering
an appropriate order, this Court has cautiously applied
SSAG
in variation
and review proceedings following a fact-specific inquiry: see
Beninger v.
Beninger,
2007 BCCA 619
,
47 R.F.L. (6th) 11
; Domirti v. Domirti,
2010
BCCA 472, 10 B.C.L.R. (5th) 281;
Morck v. Morck,
2013 BCCA 186, 44
B.C.L.R. (5th) 235. The circumstances that gave rise to the respondents initial
entitlement to support remained essentially the same for the variation
application. The respondent continues to have few assets, she is unable to work
by reason of her disability and other serious health issues, and she has an
ongoing need for support. The appellant continues have the larger income albeit
it has significantly decreased since the Consent Order. In these circumstances,
I am satisfied
SSAG
can offer guidance in determining the appropriate
order.

[43]

Assuming an eight-year relationship, an annual income of $52,000 for the
appellant, and an annual income of $13,277 for the respondent, the
SSAG
without child support formula yields a range of spousal support in the amount
of $387-$516 and a duration in the range of 4-8 years. At the time of the
application, the appellant had paid spousal support of $500, which had
increased to $658 (as of December 2010), for a period of 12 years. In these
circumstances, I am of the opinion that the appellants obligation to pay
spousal support has been discharged and the respondents entitlement to spousal
support is at an end.

[44]

In the result, I would allow the appeal, set aside the order of the
chambers judge, and order that the provisions of the Consent Order relating to
spousal support be rescinded and the appellants spousal support obligation be terminated.

The
Honourable Madam Justice D. Smith

I AGREE:

The Honourable Madam Justice
Bennett

I AGREE:

The Honourable Mr. Justice
Willcock


