Rescission, Tariffs, and Inflation: Grounds for Varying Spousal Support?
The current economic climate is tumultuous, to say the least. This instability can lead to a material change in spousal support arrangements. Tariffs are causing uncertainty, and inflation continues to run rampant. Food prices are rising at a higher rate than even inflation[1] and many Canadians, especially those on fixed incomes or facing income instability, feel the basic cost of living has become a significant source of stress.
Against this backdrop, many people paying or receiving spousal support are wondering if they can change their arrangement. What once may have been a reasonable monthly amount may now fall far short of covering a recipient’s needs. Support orders made years ago are increasingly misaligned with today’s economic realities. This is particularly true when they don’t include indexing provisions to adjust for inflation.
This raises a crucial legal question: Can inflation, and the broader economic instability we are experiencing, justify a variation of spousal support? The answer, as always, depends on the facts. However, precedent shows that the courts have been receptive to arguments about inflation as a material change in circumstances, especially when it erodes the recipient’s ability to meet their basic needs.
Legal Framework: Material Change in Circumstances
Under the Divorce Act, a spousal support order can be varied if there has been a “material change in the condition, means, needs or other circumstances of either former spouse” since the original order was made.[2] The Supreme Court of Canada in L.M.P. v. L.S. clarified that a material change must be significant, unforeseen, and not contemplated at the time of the original order.[3] This threshold ensures that variations are not granted lightly. It also ensures finality in agreements is respected.
Inflation as a Material Change
Courts have recognized that significant inflation can constitute a material change in circumstances. This recognition is particularly true when it diminishes the real value of support payments.
In Winsor v. Winsor, the Ontario Court of Appeal held that cumulative inflation did constitute a significant change in circumstances. As per the court, “inflation has had a serious eroding effect on the amount that the wife is receiving for maintenance and does constitute a material or significant change in circumstances”.[4]
However, not all cases of inflation lead to a variation. The court in Winsor highlighted that for inflation to constitute a material change it must impact one party more than the other. If the inflation has an almost equal adverse effect on both parties, this leaves their relative positions unchanged.
Indexing Provisions and Their Importance
Indexing spousal support payments to inflation through CPI clauses can mitigate the need for future variations. These clauses automatically adjust support amounts in line with inflation, preserving the recipient’s purchasing power over time. While less common in the era of Spousal Support Advisory Guidelines (SSAGs), CPI clauses remain a valuable tool. They are especially useful in long-term support arrangements or where the recipient has limited income growth potential.
In the absence of indexing provisions, recipients may find their support insufficient as the cost of living rises. Courts have acknowledged this issue, as seen in Nault. In this case, the lack of a CPI clause contributed to the support amount falling below the SSAG recommendations, prompting the court to vary the order accordingly.[5]
Tariffs and Economic Instability
Beyond inflation, other economic factors such as tariffs and broader financial instability may be considered sufficient material change. For instance, tariffs may lead to increased costs for goods and services, affecting a payor’s business income or a recipient’s living expenses. While courts have not specifically addressed tariffs as a standalone ground for varying spousal support, they may be considered as part of the overall economic context. This context influences the parties’ means and needs.
For such an argument to succeed, you would likely have to show that the tariffs/economic facts affect you more than the other party. This is similar to how inflation was addressed in Winsor.
Conclusion
In these unprecedented times, with rising inflation and economic uncertainty, recipients of spousal support may have grounds to seek a variation of their support orders. Courts have shown a willingness to recognize the eroding effect of inflation on support payments. This is particularly true when it disproportionately affects one spouse. Incorporating CPI clauses into support agreements can provide a proactive solution.
As always, each case will turn on its specific facts. Individuals should seek the advice of an experienced family law lawyer to assess whether a material change in circumstances may justify a variation of spousal support in their situation. Navigating the legal standards around spousal support variation can be complex, particularly in light of changing economic conditions. The team at Progressive Legal Solutions is equipped to provide tailored advice and representation. This expertise helps you understand your rights and pursue the outcome that best supports your financial and legal interests.
[1]https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1810026603&cubeTimeFrame.startMonth=03&cubeTimeFrame.startYear=2024&cubeTimeFrame.endMonth=03&cubeTimeFrame.endYear=2025&referencePeriods=20240301%2C20250301
[2] Divorce Act R.S.C., 1985, c. 3 (2nd Supp.), s. 17.
[3]L.M.P. v. L.S., 2011 SCC 64.
[4] Winsor v. Winsor, 1992 CanLII 7742 (ON CA), at para 4.
[5] Nault v. Nault, 2022 ONSC 904 (CanLII).
Written By Caidan Ubell
Frequently Asked Questions (FAQ): Varying Spousal Support in Today’s Economy
Yes, if inflation significantly impacts one spouse more than the other and erodes the real value of support, it may qualify as a material change in circumstances under the Divorce Act.
A material change must be substantial, not contemplated at the time of the original order, and affect the condition, means, needs, or circumstances of either spouse.
Not necessarily. Courts examine whether inflation disproportionately affects the recipient or payor. If both parties are similarly affected, a variation may not be granted.
Consumer Price Index (CPI) clauses automatically adjust spousal support in line with inflation. These provisions help maintain the recipient’s purchasing power over time and reduce the need to revisit court for variations.
While tariffs have not been tested extensively in court, they may be considered if they demonstrably impact a spouse’s income or living costs as part of a broader economic argument.
You can apply to vary your support order if you can show that inflation has caused a significant and unforeseen financial strain since the original order was made.
Courts may refer to Spousal Support Advisory Guidelines (SSAGs) and current financial disclosures to reassess the fairness of the existing support amount.
Yes, if both parties agree, you can update your support arrangement without going to court. However, it’s highly recommended to formalize the new agreement through legal counsel.
Generally, only the provisions directly affected by the material change will be revisited, unless other changes are also requested and substantiated.
Absolutely. Family law can be complex, and proving a material change requires strong evidence. A family lawyer can help evaluate your situation and prepare a strong case.
If you’re feeling the financial strain of outdated spousal support terms, it may be time to revisit your agreement. At Progressive Legal Solutions, we help clients present clear, compelling cases for variation due to inflation and economic hardship. Reach out today to book a consultation and protect your financial stability.
