When a marriage or common law relationship breaks down one of the issues that must be addressed is spousal support. In addition to deciding whether spousal support should be paid, and in what amount, a decision must be made as to whether the support should be paid in one lump sum or in the form of periodic payments. Traditionally, periodic payments are the most common form of spousal support, whereas lump sum payments tend to be reserved for more unique circumstances.
The Ontario Court of Appeal recently provided direction concerning when a lump sum award for spousal support is appropriate.
The case of Davis v. Crawford involved a couple that had lived as common law spouses for 23 years. At the time they began their cohabitation, Ms. Davis was 41 and worked full-time in the field of human resources. In 1999, Ms. Davis began to experience some serious health problems and in 2000 she retired from the workforce.
In 1982, 42 year old Mr. Crawford started a collection business with a business partner. Over the years, the business became quite successful.
During their cohabitation, the parties enjoyed a comfortable lifestyle and had always lived in “upscale housing.” One of their hobbies was to search for and buy properties with older “tear down cottages.”
Following their separation, Ms. Davis had her interest in a property the couple had purchased together (the White Lake property) and her $1,200 a month workplace pension. Mr. Crawford had his share of the net proceeds of sale of the White Lake property, his half-share in his collection business and his share of the tear down cottage properties that he continued to acquire with his new live-in.
At trial, Ms. Davis sought lump sum spousal support. Mr. Crawford argued that Ms. Davis was not entitled to any spousal support.
The trial judge ordered Mr. Crawford to pay Ms. Davis a lump sum of $135,000. In reaching this conclusion, the trial judge took into consideration the following factors:
Mr. Crawford appealed the decision arguing that contrary to what the trial judge found, the parties’ assets and means were approximately equal. He claimed that his only assets were his RRSP and his share of the proceeds of the White Lake property and that any other monies attributed to him were unsubstantiated speculation on the part of the trial judge.
The Court of Appeal upheld the trial judge’s decision to award lump sum spousal support. While the Court agreed that a lump sum award should not be made in the guise of support for the purpose of redistributing assets, it found that “the purpose of an award must always be distinguished from its effect” and that “Any lump sum award that is made will have the effect of transferring assets from one spouse to the other.” The Court went on to list the factors that should be taken into account in deciding whether lump sum spousal support is appropriate.
1. The payor’s ability to make a lump sum payment without undermining his/her future self-sufficiency.
2. The perceived advantages of making a lump sum award, which can include but are not limited to:
The disadvantages of a lump sum award, which can include but are not limited to:
It should also be remembered that, while periodic spousal support is tax deductible, lump some support is not. If you require advice with family law matters one of the lawyers in our family law group would be pleased to assist you.Share