Retirement is a big moment in a person’s life, having an impact on many things, including income. But how does retirement affect spousal support obligations? That’s a question the Ontario Superior Court of Justice addressed, issuing a ruling that may leave many surprised.

An indefinite agreement

The husband and wife involved were married for 22 years before separating in 2001. After their separation they consented to an order for the division of property. They also consented to an order for spousal support, which was dated February 10, 2006. The order directed the husband to pay spousal support in the amount of $1,000 per month for an indefinite period of time.

The husband retired in 2013. As a result, his income went from approximately $104,000 per year to approximately $48,000 per year. He brought a motion to change seeking to terminate his support obligation. That motion was dismissed. The husband appealed, stating the motion judge erred in failing to find that retirement was a material chance in circumstances; and that the motion judge erred in failing to find that payment of support out of pension income, after the pension had been divided, amounted to “double-recovery.”

The motion judge also ruled that the wife’s support payments were to terminate when she reached 64 years of age, something the wife cross-appealed.

Is retirement a material change in circumstance?

The court first looked at whether retirement is a material chance in circumstance warranting a termination of spousal support. The husband had claimed he had to retire for medical reasons relating to his depression. The motion judge found the evidence around this claim to be incomplete and inaccurate.  The motion judge did accept that the husband suffered from depression, but rejected that it had rendered him unable to work. The motion judge highlighted a number of factors that led to this determination. The husband’s initial motion did not mention depression as a factor for retirement. He was also unwilling to provide complete medical records to support his claim. Additionally, he did not apply for long-term disability benefits, which would have increased his annual income from $48,000 to $72,800. There was also no evidence to support that he was incapable of doing his job.

The motions judge also found concern in the financial information provided by the husband, writing, “The Court finds that the numbers set out in Mr. Cossette’s financial statements do not make sense or reflect his true financial picture. The expenses and subsequent deficits are unrealistic and unsustainable. On that basis, the Court finds that Mr. Cossette has not provided full and proper financial disclosure of his financial affairs.”

The motions judge ultimately determined that the husband did not need to retire, but instead retired because he wanted to, assuming that since he would have less income upon retirement that he would also be able to terminate his spousal support. The motions judge’s decision stated, “While (the husband) may have been stressed and/or depressed that he was paying spousal support, that is an unfortunate reality of life. The Court realizes that his reality is that he retired at 55 and moved across the country, is staying in shape, is mountain climbing, has purchased a new house and is engaged to be married. Given these facts there may be a change of circumstances, but it is not considered enough to be a material change in circumstances warranting the termination of spousal support.”

On appeal, the court found the determinations of the motions judge to be supported by evidence, and in some cases the lack of evidence. The husband’s unwillingness to offer particulars or documentation to support his claim that retirement was a medical necessity. In fact, the husband admitted on appeal that he did not retire due to depression, but because he wanted to retire. Instead, the husband’s argument shifted to be that retirement is a material change in circumstances, and that he was contractually eligible to retire after reaching eligibility for a full retirement. As such, he argued, he should not be required to continue working in order to satisfy a support obligation.

The court agreed with the motions judge’s decision that the husband’s retirement was not a material change, citing a 2004 decision from the Ontario Supreme Court of Justice decision which stated, “A support payor cannot choose to be voluntarily underemployed whether by retirement or otherwise and thereby avoid his or her spousal support payment obligations.”

The court went on to state that assessments such as this should be done on a case-by-case basis and that retirement can sometimes result in a material change in circumstance.

Turning to double-dipping

In regards to the second issue, the one related to double-dipping, the court agreed with the motions judge’s decision that receiving support payments from pension was not double -dipping. The court wrote “This current situation is a product of (the husband’s) own making.   He chose, through voluntary retirement, to live on pension income rather than his previous employment income.  It could be said that the effect of the motion judge’s decision was to impute employment income to (the husband).  Theoretically, the support is being paid from the imputed income rather than the pension income. However it is characterized, we agree with the motions judge that (the husband’s) retirement should not operate as either a sword or a shield – it should not, in the circumstances of this case, immunize him from ongoing support payments.

The issue of termination

The final issue addressed by the court was the motions judge’s setting of termination of support when the wife reaches 64 years of age. The court found that neither party requested a finite termination date and both parties consented to it being set aside. As such the court set aside the termination date.

The team of lawyers at Borden Family Law can help you through all stages of separation and divorce, including spousal support. We bring an in-depth knowledge of the family law system, giving our clients the reassurance that their best interests are being represented. Please call us at 905-576-6090 or reach us online in order to schedule a consultation. Please remember to ask about our flat rates.