If you have ever been involved in spousal support matters, you will have heard of the Spousal Support Advisory Guidelines, also known as the “SSAGs.”
The 2024 decision of Rathee v. Rathee, 2024 ONCA 912 is a firm reminder from the Court of Appeal for Ontario (“ONCA”) of the importance of the SSAGs.
In this matter, the spouses were married for seven years with one child. Following separation, the mother and child remained in the home for nearly a decade while receiving significant support from the father.
After years of this arrangement, the parties attended arbitration to resolve their outstanding financial issues. Regarding spousal support, the arbitrator ordered that Mr. Rathee pay Ms. Rathee $250,000 in lump sum spousal support. Ms. Rathee appealed this part of the award and sought an award of $1,000,000 instead.
On appeal at the Superior Court of Justice, the appeal judge ordered Mr. Rathee to make a lump sum payment of $1,893,603 to Ms. Rathee. The appeal judge explained that at the centre of the reasoning for overturning the arbitral award was the arbitrator’s failure to apply and examine the SSAGs.
Mr. Rathee went on to appeal this decision at the ONCA. The ONCA found that both the arbitrator and the appeal judge had improperly applied the SSAGs. In arriving at Ms. Rathee’s support entitlement, the ONCA held, the appeal judge had failed to appreciate the exponential growth of the Ms. Rathee’s net worth from $95,000 at the date of marriage to over $3.5 million at the end of the marriage. The appeal judge also declined to give Mr. Rathee credit for Ms. Rathee’s rent-free occupation of the matrimonial home. It was incorrect, the ONCA therefore held, to consider these relevant factors and understand Mr. Rathee as having made “zero payment of spousal support.” The ONCA found that this was a fundamental error to the appeal judge’s decision, thus setting it aside.
While the setting aside of this decision would usually result in the reinstatement of the arbitrator’s decision, the ONCA explained that the arbitrator had also made a fundamental error regarding the SSAGs. According to the formula required by the SSAGs, the $250,000 arbitral award had no relation to the amount recommended by the SSAGs, and the arbitrator failed to explain why such a departure was warranted. The SSAGs suggest, the ONCA explained, that at a minimum Mr. Rathee would have paid $969,000 in pre-tax spousal support over the period of time prior to arbitration.
Ultimately, the ONCA substituted its own award with the lump-sum after tax amount of $678,888 in spousal support. The ONCA arrived at this number after considering several factors, including the child support which was awarded and paid on a particularly high income, and Ms. Rathee’s occupation of the matrimonial home rent-free for many years.
More information? We’re here to help – [email protected] This WARDS LAWYERS PC publication is for general information only. It is not legal advice, nor is it intended to be. Specific or more information may be necessary before advice could be provided for your particular circumstances.
