Distinction between a review provision and a variation based on material change discussed in recent support case
When Is a Review Not a Review?
Toth v. Toth
, 2016 CarswellBC 399 (B.C. C.A.) - Newbury J.A., Neilson J.A., Savage J.A. The distinction between a review provision and a variation based on material change continues to bedevil clients and counsel alike.
There is no mystery to a variation application. Before the court may vary an order for spousal support, the applicant must establish that there has been a material change in circumstances since the last order for support was made. The right to review a spousal support order emanates either from an agreement between the parties or a court order that permits the party to seek a change in support without having to establish a material change in circumstances. Such a review takes place under section 15.2 of the Divorce Ac
t and permits a fresh look at all of the factors relevant to support. See Jordan v. Jordan
, 8 R.F.L. (7th) 147 (B.C. C.A.), Scott v. Scott, 58 R.F.L. (6th) 256 (B.C. C.A.).
The parties in this case settled by way of a separation agreement which was subsequently incorporated into a court order. The relevant paragraph of the separation agreement says:
The parties agree that there shall be a review of child and spousal support on July 1, 2010, and on July 1st in each year thereafter, with an exchange of such financial information and supporting documents as may be necessary to inform each party as to the income and financial circumstances of the other, and the needs of the children . . .
It goes on to provide what documents should be exchanged for this so called annual review.
The parties subsequently got into a dispute about the appropriate level of income and the wife sought a review. The husband resisted on the grounds that there was no material change of circumstances and the relevant clause did not provide for a review.
The Court of Appeal engaged in an analysis and interpretation of the contract between the parties. Ultimately, it made no sense to them that the parties would have agreed to an annual review of child support as opposed to an adjustment based on the income information that was being provided. The Court of Appeal agreed that the wife is limited to pursing a variation application under the Divorce Act
Thus, the lesson here is that using the word “review” does not necessarily mean that the parties intend a review as that term is understood under the Divorce Act
and the case law. In light of the Supreme Court of Canada’s comments about reviews in Leskun v. Leskun
, 34 R.F.L. (6th) 1 (S.C.C.), it is important that when drafting a review clause that the circumstances to be taken into account on a review are carefully delineated, and the parties make it clear in the contract that it is indeed a review application that is to occur and not a variation.
If the parties use specific and clear language to indicate that the parties agree that it is not necessary to establish a material change in circumstances in order for the court to review the spousal support, this will make it clear to the court what the parties really intended and what flows from the contract.