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Sarah Tradewell |
Since COVID-19 has caused layoffs and reduced income for many Canadian businesses, the question on many lawyers’ minds has been whether a spouse’s reduced income due to the impact of COVID-19 will manifest in a reduced income for the purposes of spousal support. A recent decision suggests that it could.
In Small v. Small 2020 BCSC 707, the trial was heard over eight days in October 2019 and in January 2020, but the judgment was rendered on May 7, in the midst of the current pandemic. The mother was a yoga instructor and courier for a food delivery service and the father worked as director of sales for a technology company. The issues to be determined at trial were child support, spousal support and property division. Given that the COVID-19 restrictions were not in place at the time of trial, there was no evidence led about the impact of this as yet unknown pandemic in Canada.
The court found that each party’s income was to be determined at the time of trial, but decided to give leave to the parties to apply to have their incomes redetermined based on post-trial events. The court’s reasons indicated that COVID-19 may be a factor in determining a party’s income (paragraph 209):
Before turning to consideration of the income to be imputed to the respondent, I must comment on the impact of the COVID-19 pandemic on the issue of prospective support. This trial concluded at the end of January 2020. Since that date, there have been public health directives that have greatly restricted business operations in British Columbia, including the mandatory closures of fitness centres and yoga studios. There is no present indication of when such restrictions might be lifted.
These events do not form part of the trial record, and I have no evidence before me as to the impact, if any, of the COVID-19-related restrictions on either parties’ income. However, I am being asked to determine income in a manner that will influence the parties’ future financial positions. I do not think it appropriate to simply ignore post-trial events, of which I can take judicial notice, that suggest there might already have been a material change in circumstances for one or both parties since the trial concluded.
I will therefore determine each party’s income as of the time of trial. However, I will also give leave to either party to apply to have their income re-determined based on post-trial events. Hopefully this judgment will provide sufficient resolution of the issues in dispute between the parties that they can consensually resolve any remaining controversies. However, in the interests of justice and fairness, in my view both parties should have the opportunity to return to court to ensure that any prospective support orders reflect any COVID-19-related impacts on their incomes that are of more than a temporary nature.
These events do not form part of the trial record, and I have no evidence before me as to the impact, if any, of the COVID-19-related restrictions on either parties’ income. However, I am being asked to determine income in a manner that will influence the parties’ future financial positions. I do not think it appropriate to simply ignore post-trial events, of which I can take judicial notice, that suggest there might already have been a material change in circumstances for one or both parties since the trial concluded.
I will therefore determine each party’s income as of the time of trial. However, I will also give leave to either party to apply to have their income re-determined based on post-trial events. Hopefully this judgment will provide sufficient resolution of the issues in dispute between the parties that they can consensually resolve any remaining controversies. However, in the interests of justice and fairness, in my view both parties should have the opportunity to return to court to ensure that any prospective support orders reflect any COVID-19-related impacts on their incomes that are of more than a temporary nature.
In this case, the COVID-19 restrictions arose well after the trial occurred but before judgment was rendered, so there was no evidence before the court of its impact on the parties’ income. Although the court made the order based on the evidence at trial, it opened the door for more current evidence to redetermine income based on the impact of the pandemic on either party’s income.
While courts may not consider the impact of COVID-19 for trials occurring before the pandemic, parties may have the opportunity to apply to redetermine their income based on the impact of the pandemic. The impact of COVID-19 may be considered a “material change in circumstances” since the trial warranted a variation of the court’s determination of a party’s income.
Based on the principles laid out in Small, it is possible that, with the right evidence before it, a court may find that the impact of COVID-19 affects a party’s income for the purposes of support. This case may open the door for litigants experiencing layoffs or a reduction in income as a result of COVID-19 to vary an order for spousal support made before the pandemic.
Sarah Tradewell is an associate in Clark Wilson LLP’s family law group. Tradewell helps clients structure their affairs as they enter relationships and disentangle their lives as they exit relationships.
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