Retirement and Spousal Support by Lorne N MacLean QC
Can a Vancouver spousal support paying spouse retire early and cancel or reduce their spousal support payments?
Can a receiving spouse refuse to work to get more support?
Isn’t a person free to do what they want for a career?
All these Vancouver spousal support questions get asked frequently of Lorne MacLean, Q.C. our founding partner and high income and net worth spousal support department head.
What happens when a spouse decides on retirement early? It depends on the economy, any inducement offered, other replacement income, health issues and a plethora of other factors. It is key you see a top family lawyer before making any decision and not after when a nasty surprise could await you.
A recent BC Supreme Court case dealt with this issue as well as the remarriage issue which we dealt with in an earlier blog and her dis how it works in a nutshell:
[1] The applicant Mr. Watkins’ income is reduced owing to his retirement from his usual employment. He asserts that his retirement and consequent loss of income constitutes a change of circumstances sufficient to merit a variation of his past and ongoing spousal support obligation. He also asserts that Mrs. Watkins’, now known as Ms. Leiding, need for spousal support has changed owing to her relationship with a new romantic partner.
[2] Ms. Leiding opposes any change to the spousal support regime, arguing that Mr. Watkins has not shown that he had bona fide reasons to retire when he did and that her financial circumstances, and thus her need for spousal support, have not materially changed.
The Law
(4.1) Before the court makes a variation order in respect of a spousal support order, the court shall satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order or the last variation order made in respect of that order, and, in making the variation order, the court shall take that change into consideration.
[19] To qualify as a change in circumstances within the meaning of s. 17(4.1), the change must be material and it must have been unforeseen by the parties when the spousal support order was made: Willick v. Willick, [1994] 3 S.C.R. 670. To be material the change must be substantial and continuing and one that, if it had been known to the parties at the time, would have resulted in different terms: Carter v. Carter (1991), 34 R.F.L. (3d) 1 (B.C.C.A.).
[20] A payor’s early retirement from previously steady employment has been the subject of much discussion in the jurisprudence concerning variation applications. In my view, the following two excerpts are the most apropos (and most pithy) expressions of the court’s stance on unanticipated voluntary early retirement:
Even where a settlement agreement provides that the retirement of the support payor is a sufficient factor to review the support order or where the court has found that the retirement satisfies the threshold test for a variation application, the circumstances surrounding voluntary early retirement must be carefully scrutinized. The courts have investigated the circumstances surrounding the early retirement before the court has allowed the support payor to rely on the decline in income to reduce the support obligation. (See Campbell v. Campbell (1991), 36 R.F.L. (3d) 284 (Ont. U.F.C.) and Vennels v. Vennels (1993), 45 R.F.L. (3d) 165 (B.C.S.C.).
Emphasis added
(Levergood v. Levergood (1995), 17 R.F.L. (4th) 423 (Ont. Gen. Div.)
And: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.
In these difficult economic times, with ever-growing frequency, employees are being induced by their employers to take early retirement. Sometimes employees are given little option, for if they elect to stay on, their work is not commensurate with what they had before; they may be required to move to distant locations. When voluntary retirement is advanced as a reason for seeking a reduction in maintenance, 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.
(Vennels v. Vennels (1993), 76 B.C.L.R. (2d) 69 (S.C.))
[21] Levergood and Vennels have been quoted with approval by this court. See, for example, Fehr v. Fehr, 2006 BCSC 1440 and Butler v. Butler 2013 BCSC 315.
[22] It follows from the sentiments expressed in these cases that a payor spouse has an obligation to make reasonable use of his or her capacity to earn income when the opportunity to do so exists. It will not meet the test of a change of circumstances for a payor to take a voluntary decision to down tools and to not work when he or she still has the capacity and opportunity to earn income.
[26] Furthermore, Mr. Watkins appears to be in good health. There do not appear to be any bars to his working for a living. He has not described to the court why it is that it is better for him to remain out of the work force than to seek and find remunerative employment. More particularly, Mr. Watkins has not described why it is that his retraining for a career in real estate appraisal is a better choice than, say, taking another job at a different bank or perhaps working as a bookkeeper.
[27] On the other side, Mr. Watkins cannot be said to have been a reluctant payor. He has paid support as required and continued to pay support even after his income substantially declined in 2012 and in early 2013. That said, the onus clearly lies on Mr. Watkins to provide evidence of the bona fides of his decision to leave a well-paying job for early retirement. On that issue I find that his materials leave me with more questions than answers.
[28] With some regret, I find that I am compelled to conclude that Mr. Watkins has not satisfied me that there were good and reasonable grounds for his taking early retirement. I find that Mr. Watkins’ capacity to earn income is unchanged. Therefore I cannot find that he has shown a change in circumstances such as would merit variation of his spousal support obligation.
In the end result the Judge determined the new relationship reduced the wife’s need and that the husband’s income of $90,000 at the time of the original order was set at $80,000 despite the retirement.
So while the husband was not able to use his self induced early retirement as a basis for reducing support the fact the ex-wife was in a new relationship reduced her need and support was cut in half from $1500 a month to $750.
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