Spousal Support Retirement Variation Termination cases involve balancing someone coming to the end of their working career against the need for indefinite support for a spouse who is dependent on spousal support to met their financial needs.
What happens when the paying spouse who after a long marriage wants to retire early? Should spousal support cease? Must the paying spouse continue to work? MacLean Law’s Spousal Support Retirement Variation Termination lawyers explain, the answer is that it depends. As we will see in today’s blog, the courts take a different approach to voluntary or early retirement as opposed to retirement at the normal or contractually required age as mandated by a third party employer.
Spousal Support Retirement Variation Termination
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In the recent case of Greco v Greco the BC Supreme Court reviewed the law of spousal support variations and retirement:
[27] A further consideration of the test was undertaken by Madam Justice Bennett in Dedes v. Dedes, 2015 BCCA 194, who said at para. 25:
[25] As articulated in L.M.P., the test for material change is based not on what one party knew or reasonably foresaw, but rather on what the parties actually contemplated at the time the order was entered by agreement. A function of the material change threshold is to prevent parties from re‑litigating issues that were already considered and rejected; in such cases, an application to vary would amount to an appeal of the original order (see Gordon at para. 15). As was stated by L’Heureux-Dube J. in Willick at p. 734, “the diversity of possible scenarios in family law dictates that courts maintain a flexible standard of judicial discretion which does not artificially limit the adaptability of the Divorce Act provisions”. See also G. (L.) v. B. (G.), [1995] 3 S.C.R. 370 at paras. 49−51 and Jakob v. Jakob, 2010 BCCA 136 at para. 40. [Emphasis in original.]
Spousal Support Retirement Variation Termination Early Retirement
Does Retirement Constitute a Material Change in Circumstances?
[28] A payor spouse who has reached the expected age of retirement, or who retires for medical reasons, may fairly be relieved of an obligation to continue spousal support payments, or have that obligation reduced. However, a payor spousal may not be relieved of their spousal support obligations if the retirement is voluntary and the retirement was motivated by the desire to avoid maintenance payments: see Young v. Young, 2011 BCSC 887 at paras. 38-39.
[29] In Boston v. Boston, [2001] 2 S.C.R. 413, 2001 SCC 43, the majority held that there is no reason per se that spousal support cannot continue past the date of retirement of the pension-holding spouse. The applicant will be required to demonstrate that there has been a material change in the circumstances of the parties and the reduction in income following retirement may constitute such a material change.
[30] But while retirement may constitute a material change in circumstances for the purposes of varying an order for spousal support, the courts will carefully scrutinize a voluntary retirement. In those cases, the individual circumstances of each of the parties should be considered: see Szczerbaniwicz v. Szczerbaniwicz, 2010 BCSC 421 at para. 21; Gajdzik v. Gajdzik, 2008 BCSC 160 at para. 35.
[31] In Szczerbaniwicz, Punnet J. wrote that if a party’s retirement was motivated by the desire to avoid a maintenance obligation, the court will most likely impute income. Furthermore, he said that:
[26] … Even if the party’s motivation was not to avoid maintenance, the court will likely impute income so long as the party has the ability to earn an income.
[27] If the retirement is not voluntary because of economic circumstances, medical reasons, or an employer’s actions and the payor is unable to work, the court will tend to reduce the maintenance payable; otherwise, if the payor is still capable of earning an income, his application to terminate or vary spousal support will likely fail: Bentley v. Bentley, 2009 CanLII 3779 (Ont. S.C.J.); Bullock v. Bullock, 2007 BCSC 318, 36 R.F.L. (6th) 150 at para. 7.
Spousal Support Retirement Variation Termination Intentional Retirement
[32] In Szczerbaniwicz, Punnet J. cited Vennels v. Vennels (1993), 76 B.C.L.R. (2d) 69, which explains that a court must consider the circumstances of the retirement carefully and ensure that the payor has not been prompted by deceit to avoid support orders when voluntary retirement is advanced as a reason for seeking a reduction in maintenance. In the often quoted passage from Vennels, Coultas J. said:
Retirement of a payor under a maintenance order usually results in a significant reduction of income; that is so in this case. Courts are not guided by legislation to enquire into the circumstances of retirement. Courts have no power to compel people to work. However, courts should, in the interests of justice, refuse to consider a reduced income resulting from retirement to be a material change in circumstances justifying a variation of a support order, where a payor spouse has intentionally put him or herself out of the money in order to frustrate a maintenance order. Any such deliberate self-induced impecuniosity constitutes deceit.
[33] In Szczerbaniwicz the parties entered into a consent order providing monthly spousal support of $3,300. Eighteen months later, without consulting or advising the payee, the payor, then age 52, voluntarily retired from the Armed Forces where he had been a Lieutenant Colonel earning $118,000 per year. He started a consulting business, which did not generate much income and continued to pursue a PhD. The payor had received his full pension, which was split with the payee.
[34] Justice Punnett found that the payor’s decision to retire was purely personal and that the defendant’s reasons for taking early retirement should not relieve him of his obligation to pay spousal maintenance. Justice Punnett went on to impute the payor’s income at $90,000 based on the payor’s education, experience and skill set, his prior income, and a “dearth of evidence respecting what employment opportunities are available to him” (at para. 39).
Spousal Support Retirement Variation Termination Harder In Longer Marriages
[35] In the case of Fehr v. Fehr, the applicant payor husband was 58 years old at the time he applied to vary and substitute an order that he have no further spousal support obligations. The parties had a traditional marriage of 27 years and Mr. Fehr’s income resulted in an order for spousal support of $3,800.00 per month. Sometime after the divorce, Mr. Fehr’s employer restructured their work. Mr. Fehr opted for a salary continuance while he sought other work. However, the court found that his efforts in this regard were minimal. Mr. Fehr deposed that he had some continuing medical issues requiring medication; however the court found there was insufficient evidence to conclude that he was not able to work for medical reasons.
[36] In dismissing Mr. Fehr’s application to vary and terminate spousal support, Justice Ross found that while Mr. Fehr’s retirement was not entirely voluntary, he was not of retirement age and he had the capacity to earn an income which he had chosen not to exercise. Justice Ross went on to say that Mr. Fehr had voluntarily taken himself out of the work force and that he did so “without regard to his obligations to support Ms. Fehr.”
Spousal Support Retirement Variation Termination Easier In Shorter Marriages Where Lengthy Payments Made And Health Issues
[37] In Powell v. Levesque, 2014 BCCA 33, the parties separated after an eight-year marriage-like relationship. After twelve years of paying spousal support and upon her retirement from the military after 26 years of service, the appellant, who was then age 44, applied to vary her support obligation. The chambers judge dismissed the application finding there was no material change in circumstances. On appeal, the Court reiterated the test for material change (at paras. 23-29) and held that the appellant’s retirement from the military was a material change of circumstances. In overturning the trial decision, the Court also found that the payor’s earning capacity was diminished as a result of health issues. Although the respondent had an ongoing need for support as a result of her serious health issues, the Court held that the termination of spousal support was appropriate.
[38] I note that in Powell, the relationship was one of eight years. Payment of spousal support had continued for 12 years. Relevant medical evidence was adduced; the Court of Appeal referred to the payor’s “serious health issues.” These facts are markedly different from the facts in the case at bar.
[39] In Emery v. Emery, 2010 BCCA 229, the payor spouse retired from his work as a police officer at age 52 on the recommendation of a psychologist. It would appear that evidence of the payor’s chronic depression and post-traumatic stress order was before the Court. The application to vary was dismissed by the trial judge, which decision was overturned on appeal. The Court of Appeal found that the retirement in those circumstances amounted to a material change in circumstances and that rather than simply suspend the payments as the trial judge had, spousal support should have been reduced based on the payor’s retirement income and with a review after a reasonable time. The Court said that upon review, the anticipated evidence would include medical evidence regarding the payor’s fitness to work in other occupations and evidence of his efforts to secure other employment.
Spousal Support Retirement Variation Termination At Age 63 Refused
[40] In Francis v. Logan, 2008 BCSC 1028, the applicant was 63 years old and sought a variation of an existing court order to terminate spousal support payable to the plaintiff, or alternatively, a reduction in the amount of spousal support. The applicant had been employed in a management capacity for the same employer for approximately 20 years before his retirement. Upon retirement his income was anticipated to drop to $27,400 per year from the $100,000 on which the existing spousal support order was based. The applicant argued that his reasons for retirement were that:
(a) he has worked a long time;
(b) their son had now completed school;
(c) he would like to avoid a stressful round of timber negotiations;
(d) he is being monitored for prostate cancer; and
(e) he would like to spend more time with his new wife.
[41] The application was dismissed. Justice Parrett held that the decision to take early retirement was not dictated by medical needs, or economic exigencies but rather personal preferences and choices. The court also referenced that the wife’s needs remained the same and the payor’s ability to pay had been affected not by circumstances outside his control but by decisions very much within that control. Justice Parrett commented at para. 39 that “to allow a variation in this case, in these circumstances, would be to sanction a means of defeating spousal support orders which would ignore the compensation aspect of the analysis in Bracklow v. Bracklow, [1999] S.C.J. No. 14.”
[42] Clearly the authorities reflect that caution is required in order to ensure that the goals of spousal support are not eliminated by an early or voluntary retirement.
[43] I have concluded that while Mr. Greco’s voluntary retirement constitutes a material change in circumstances, the authorities do not support the termination order he seeks as a result. Instead, I have concluded the appropriate consequence of Mr. Greco’s voluntary retirement in all the circumstances is to impute employment income to him.
In the end the court ordered the husband to pay reduced support of $250 a month until the husband reached age 65 in 5 more years at which point it would terminate.
Our Spousal Support Retirement Variation Termination lawyers can assist you in determining if a reduction or termination of support is fair under the circumstances. Call us at 1-877-602-9900 toll free across BC or in Calgary.
