The Eldridge’s met on an archeological dig, married in 1977, and as archeologists worked together in their consulting business, Millenia, for several years. Four children were born and Ms. Eldridge became their primary caregiver while her husband travelled to work sites. The parties separated in 2010 when Ms. Eldridge was 54 and her spouse 57, with one child with special needs remaining at home. They were divorced in 2016.
After years of negotiation with the assistance of a mediator, a business valuator, and their respective accountants, an agreement was reached in September 2015, which saw Mr. Eldridge retain the business and Ms. Eldridge their family home. Detailed spousal support terms were included in their agreement which provided for a base amount of support of $5,000 and an additional amount to be paid on any income Mr. Eldridge earned in excess of $120,000 per annum. Ms. Eldridge received monthly amounts ranging from $5,000 to $11,000. Her income was imputed at $24,000 annually. The agreement also called for a review when Mr. Eldridge attained the age of 65.
In July 2018 when Mr. Eldridge was about to turn 65 he sought to review spousal support in order to plan his upcoming retirement and possible sale of his business. A med/arb agreement was signed, re-appointing their original mediator/arbitrator.
The med/arb process began in March 2019 and concluded 22 months later in December 2020. The arbitrator handed down his award in April 2021, finding that Mr. Eldridge’s obligation to pay spousal support should be gradually scaled down such that from May 2021 to June 2022 he should pay $7,500 a month; from July 2022 to June 2023 he should pay $5,500 a month, from July 2023 to June 2024 he should pay $3,750 a month; and from July 2024 to August 2025 he should pay the sum of $2,500, as his final payment. The arbitrator noted that by the termination date Ms. Eldridge would be almost 69 years old and her husband, 72 years old, and provided the following reasoning:
“MTE needs certainty so that he can make decisions regarding the potential sale or winding up of his business. The declining support schedule gives substance to the parties’ agreement that his work after the age of 65 should be voluntary. I anticipate that his income will decline over the next five years and then any choice he makes to continue to work should be his to make without concern to his implication to spousal support. My approach also dispenses with ongoing dispute resolution costs that have negatively impacted both parties’ finances.”
Ms. Eldridge appealed the spousal support award to the British Columbia Supreme Court, (AEE v. MTE 2022 BCSC 1534) raising the following issues:
- Did the arbitrator err in respect of entitlement and quantum on a prospective basis?
Ms. Eldridge argued that her former husband’s application to reduce support was premature as their agreement provided that support would by paid until Mr. Eldridge turned 65. The Supreme Court chambers judge agreed that the arbitrator erred by making an award based on a speculated event, which had not yet occurred and set aside the termination date of August 2025, ordering support to continue in accordance with the parties’ agreement, pending further agreement or an order of the court.
- Did the arbitrator err in failing to award arrears of spousal support?
The court noted that the arbitrator failed to rule on the issue of arrears of support for the period between June 2018 and June 2021. Given the arbitrator’s error in gradually decreasing support, the court ordered Mr. Eldridge to pay to his former wife arrears for the aforementioned period.
- Did the arbitrator err in declaring that the appellant was not entitled to any of the proceeds of sale of the business?
The appellant argued that the arbitrator’s declaration that she was not entitled to any of the proceeds of sale of Mr. Eldridge’s business was not sought by her, was gratuitous and unrelated to the issue of spousal support, amounting to an error in law. The court did not allow this ground of appeal, finding that the arbitrator was empowered to consider “all and any other issues that remained to be determined”; that the eventual sale of the business was an issue in the arbitration; and the arbitrator prudently clarified that all proceeds of sale belonged to Mr. Eldridge.
- Did the arbitrator err in failing to award costs to the appellant?
The arbitrator determined that success had been mixed, identifying several factors, including that Mr. Eldridge succeeded in reducing the support payable on a sliding scale, albeit the amounts he proposed were much lower than the arbitrator’s award. He also used up precious time by calling an expert whose evidence was entirely discarded. In addition, two days were lost because Mr. Eldridge failed to provide sufficient notice of his intention to call further expert evidence.
Ultimately, the arbitrator ordered the parties to equally share the costs of the arbitrator and be responsible for all other costs incurred by each of them. He further determined that because Mr. Eldridge overpaid support from July 2018 to date, Ms. Eldridge was effectively compensated for the time and expense thrown away in the arbitration process.
The court identified several problems with the arbitrator’s decision, noting that the written award failed to explain what overpayment the arbitrator was referring to. The court also found error in the arbitrator’s ruling in that he mixed his costs award with a support compensation award. The court found that Ms. Eldridge was entitled to her costs for three days of the arbitration and her costs of the appeal.
But that was not the end of the litigation for the Eldridge’s. Mr. Eldridge appealed the lower court order asserting that the chambers judge erred by intervening in the arbitration award and erred by ignoring the terms of the parties’ agreement with its reference to a “de novo” support review. (Eldridge v. Eldridge 2024 BCCA 21)
The appellate panel allowed the appeal, agreeing that the chambers judge’s finding that the parties’ agreement should govern his payment of spousal support was wrong in law. The appeal court launched into an examination of the fundamental principles of spousal support, canvassing the law on compensatory, non-compensatory, and contractual support, and citing leading cases including Chutter v. Chutter 2008 BCCA 507, Hodgkinson v. Hodgkinson 2006 BCCA 158, Oulette v. Oulette 2012 BCCA 145, Hathaway v. Hathaway 2014 BCCA 310, and Smith v. Smith 2008 BCCA 245.
The appeal court agreed with the chambers judge, finding that based on basic principles of compensatory support, the arbitrator’s termination of Ms. Eldridge’s support was contrary to the law and also agreed that to vary the support based on speculation of what might occur in the future was contraindicated. They also found that the arbitrator gave undue weight to the concepts of finality and certainty to the detriment of Ms. Eldridge, and rather than a step-down support order and termination, more appropriate orders would have been a review or variation order.
Finally, the appeal court found that the chambers judge erred by ordering support pursuant to the parties’ agreement without assessing whether the agreement formulas were in accordance with the Divorce Act provisions, the Spousal Support Guidelines, and whether the agreement required a fair determination of Mr. Eldridge’s income under the Child Support Guidelines.
The appeal court held that where the chambers judge went wrong was in her misapprehension as to the scope of the review required. In her reasons she stated:
“…According to the appellant, the formula in the agreement did not reflect his efforts in operating Millenia and the method of calculating support was flawed as it was based on 100% of pre-tax corporate income less amounts paid to his holding company, rather than his
“true” income available for distribution. Nonetheless, he agreed to this clause. I do not find this to be relevant to the issues before me. Neither the arbitrator nor this court are reopening the previous final agreement only looking forward.”
The upshot is that ordering the parties to abide by their agreement was tantamount to having no review of support at all. The appeal court upheld the order for retroactive spousal support and the costs award, finding that it was permissible to set off compensation against costs, citing Jamieson v. Loureiro 2010 BCCA 52. They remitted the matter of support commencing May 2021 to the arbitrator.
While it seems sensible to bring a review application in anticipation of a shortly pending review date, the Court of Appeal has been clear that they do not support such a speculative event as the foundation for a review order. In Renwick v. Renwick 2007 BCCA 521 the court said that an order terminating support should only be made when the applicant’s “working life has clearly come to an end.”
**This article was first published by LAW360, a division of LexisNexis Canada.
